Brazil budget deficit rises to record in 2016, within target

BRASILIA (Reuters) - Brazil budget deficit rose to a record high in 2016 but stayed within the government’s target, the central bank said on Tuesday, reflecting the dire state of the country’s finances prior to the approval of a federal spending ceiling.

The primary budget deficit, which excludes interest payments, stood at 70.737 billion reais ($22.7 billion) in December and 155.8 billion reais in 2016, the bank said.

“The result was the largest for a calendar year in the central bank series, which shows how challenging our situation is,” central bank economist Fernando Rocha told journalists at a news conference to comment on the numbers.

The overall budget deficit, which includes interest payments, was 562.8 billion reais in 2016, equivalent to 8.93 percent of gross domestic product.

Net debt as a percentage of GDP rose to 45.9 percent in 2016 from 35.6 percent in 2015 and is expected to climb further to 46.4 percent in January, Rocha said. Gross debt increased to 69.5 percent of GDP from 65.5 percent in 2015 and is forecast to reach 70.2 percent in January.

The government’s target for the primary budget deficit in 2016 was 163.9 billion reais. For this year, the government aims for a deficit of 143 billion reais as it looks to take the economy out of recession and restore its investment-grade credit rating.

($1 = 3.1049 reais)

Reporting by Silvio Cascione; Editing by Chizu Nomiyama