April 30, 2014 / 3:05 PM / in 4 years

UPDATE 1-Brazil primary budget surplus rises in March

(Adds details on budget numbers, background and context)

BRASILIA, April 30 (Reuters) - Brazil’s primary budget surplus grew in March from February as the government continued its efforts to shore up public finances and regain credibility with investors.

Brazil posted a primary budget surplus of 3.58 billion reais ($1.6 billion) in March, the central bank said on Wednesday. The figure was up from 2.13 billion reais in February and in line with forecasts for a 3.5 billion reais surplus in a Reuters poll of nine analysts.

The primary budget represents the public sector’s excess revenue over expenditures before debt payments.

Brazil’s public finances have deteriorated rapidly under President Dilma Rousseff, leading Standard & Poor’s to downgrade the country’s sovereign debt rating closer to junk status last month.

Brazil’s government pledged to save 99 billion reais this year in primary surplus, or 1.9 percent of the country’s GDP. Many economists see that target as out of reach without the government resorting to accounting gimmicks or extraordinary revenues from concessions or tax settlements.

Rousseff has already started to hike some taxes to make up for heavy revenue losses coming from rising energy subsidies to help struggling electricity distributors.

The government announced on Tuesday an increase in taxes on beer, soda and other beverages that will add 1.5 billion reais in tax revenues this year alone.

In the 12 months through March, Brazil’s primary surplus was equivalent to 1.75 percent of GDP, down from 1.76 percent in February and still below the government’s target.

The government has fallen short of its consolidated primary surplus target in the past two years.

Brazil’s overall budget deficit, which includes interest payments, widened to 13.022 billion reais in March from 9.516 billion in February.

The public sector’s net debt was equivalent to 34.2 percent of GDP in March, up from 33.7 percent of GDP in February.

$1 = 2.233 Brazilian reais Reporting by Alonso Soto; Editing by James Dalgleish

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