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By Marcela Ayres and Jamie McGeever
BRASILIA, Sept 27 (Reuters) - Brazil’s public finances improved in August, Treasury figures on Friday showed, with the government aggressively cutting back on spending to compensate for declining revenues and put it on track to beat its fiscal targets for the year.
Treasury Secretary Mansueto Almeida told reporters in Brasilia the central government’s primary deficit this year will likely be 15-20 billion reais below the official target of 139 billion reais.
That will be a result of tight control over spending, given that revenue growth remains weak due to the sluggish rate of expansion across the wider economy.
“We still don’t know what the trend is for revenues. We will have to wait and see,” Almeida said, adding that only around 10% of the country’s necessary fiscal adjustment has been done so there will be no let up in the squeeze on spending.
The central government’s primary budget deficit in August was 16.85 billion reais ($4.05 billion), less than the 18.6 billion reais deficit median forecast in a Reuters poll of economists and 17.1% narrower in real terms than the same month last year.
Total spending in August fell 4.3% in real terms and total revenue fell 1.3%, while in the first eight months of the year spending was down 1.3% and revenues were up 0.8%, Treasury said.
In the first eight months of this year, the accumulated deficit before interest payments are taken into account stood at 52.12 billion reais, 14.6% narrower in real terms.
In the 12 months to August, the deficit stood at 115.2 billion reais, or 1.61% of gross domestic product. The government’s end-of-year target is 139 billion reais, or around 1.94% of GDP.
Despite the improvement, Almeida said that only 10% of the required fiscal adjustment has be done to date. On current trends, obligatory spending will end the year at a record 1.3 trillion reais and discretionary spending will fall to a historical low of 108 billion reais.
$1 = 4.16 reais Reporting by Marcela Ayres Writing by Jamie McGeever Editing by Catherine Evans and David Gregorio