* Primary surplus falls slightly to 5.4 bln reais in June
* Analysts question if budget freeze is enough
BRASILIA, July 30 Brazil's primary budget
surplus narrowed slightly in June from the previous months,
central bank data showed on Tuesday, but its share of the gross
domestic product shrunk on annual basis.
The country's primary surplus was 5.43 billion reais ($2.40
billion) in June, down from 5.68 billion reais in
The primary budget balance, which represents the public
sector's excess revenue over expenditures before interest
payment on its debt, was expected to reach a surplus of 3.5
billion reais according to the median forecast of 12 analysts
surveyed by Reuters.
President Dilma Rousseff's government announced a spending
freeze of 10 billion reais last week in a move to regain
investors' confidence and reach an already reduced primary
target equivalent to 2.3 percent of gross domestic product.
Still, most analysts say the freeze will be insufficient to
improve the government finances, which are dominated by current
expenditures like public servants' wages and benefits.
The primary balance is a gauge closely watched by investors
because it measures a country's ability to service its debt. The
government missed its primary surplus target in 2012 and will
miss it again this year as a slew of tax breaks aimed at
reviving the economy hits revenues.
In the 12 months through June, the primary surplus was
equivalent to 2.00 percent of GDP, much lower than the 2.71
percent posted during the same period a year ago.
Even with the deterioration of the public finances the
public sector's net debt remained relatively stable in June at
34.5 percent of GDP versus 34.8 percent the previous month.
However, the country's gross debt has climbed in recent
years, according to calculations by private economists and
multilateral institutions. Last week, Brazil asked the
International Monetary Fund to review the way it calculates the
country's gross debt.
The country posted an overall, or nominal, budget deficit of
12.198 billion reais in June.