UPDATE 1-Brazil central govt surplus falls sharply in Oct

* Primary surplus totals 7.7 billion reais in Oct

* Could raise pressure for fiscal tightening next year
(Adds details)

BRASILIA, Nov 29 (BestGrowthStock) – The primary surplus of
Brazil’s central government fell sharply in October compared to
a year earlier, increasing pressure on the next government to
get its fiscal accounts back in order.

The central government — which includes the national
treasury, the central bank and the social security system —
posted a 7.7 billion reais ($4.5 billion) surplus in October,
down from a 11.2 billion reais surplus in the same month in
2009, the national treasury said on Monday.

The surplus was the smallest for the month of October since
2006 as spending increases outpaced revenue growth.

The number also represented a plunge from last month’s
previously reported record 26.1 billion reais surplus, when the
government benefited from income linked to a large Petrobras
(PETR4.SA: ) stock offering.

The accumulated surplus from January to October totaled
63.383 billion reais, or 2.19 percent of the gross domestic
product. That compares to a surplus of 1.05 percent of GDP for
the same period in the previous year.

The October result could renew pressure on President-elect
Dilma Rousseff’s incoming government to carry out pledges that
it will make substantial cuts to the 2011 budget. Rousseff will
be sworn in as Brazil’s next president on Jan. 1.

Some analysts and government officials see tighter
government spending as the most effective way to help push
borrowing costs lower. At 10.75 percent, Brazil’s interest
rates are among the world’s highest, and are considered to be
an obstacle to strong, long-term growth.

The central government’s primary surplus for the year to
date rose sharply compared to a year ago, but that was also due
to the Petrobras-linked revenues. The surplus totaled 63.4
billion reais between January and October — the equivalent of
2.19 percent of gross domestic product, compared to 1.05
percent of GDP for the same period in 2009.

The data comes only one day before the central bank
releases consolidated budget numbers, which have deteriorated
sharply in 2010 due to rising government spending in an
election year.

The consolidated primary surplus represents the excess of
revenues over expenditures, excluding interest payments on
debt.

(Reporting by Isabel Versiani; Writing by Ana Nicolaci da
Costa and Luciana Lopez; Editing by Raymond Colitt, Kenneth
Barry and Diane Craft)

($1=1.720 reais)

UPDATE 1-Brazil central govt surplus falls sharply in Oct