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Monday, December 25, 2006

Government Deficit Increases

Brazil's budget deficit widened in November as the government increased public spending and tax collection fell:

The deficit, including federal and local governments and state companies, widened to 6.52 billion reais ($3.03 billion) last month from 2.79 billion reais in October, according to a report distributed in Brasilia today.

The federal government transferred more cash to state governments in November to pay salaries and social benefits, said Altamir Lopes, head of the central bank's economic research department. The increase doesn't threaten the government's targets, he said.

``The higher costs won't stop us from reaching the fiscal targets for the year,'' Lopes told reporters in Brasilia.

The budget surplus before interest payments, known as the primary surplus, narrowed to 5.61 billion reais in November from 10.5 billion reais in October. That's more than the median forecast of 4.8 billion reais in a Bloomberg survey of 14 economists.

Brazil's President Luiz Inacio Lula da Silva has pledged to post a primary surplus -- the surplus before debt payments -- of 4.25 percent of gross domestic product this year.

Brazil's net debt as a percentage of gross domestic product fell in November to 49.3 percent from 49.5 percent in October.

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