(Adds details, background on target)
BRASILIA, Aug 30 (Reuters) - Brazil’s budget deficit narrowed more than expected in July but was still the largest on record for the month, central bank data showed on Wednesday.
Brazil posted a primary budget deficit of 16.138 billion reais ($5.1 billion) in July, central bank data showed on Wednesday, smaller than the median forecast in a Reuters poll of 17.2 billion reais.
Brazil had a deficit of 19.552 billion reais in June. The deficit in the 12 months through July reached 170.520 billion reais, equal to 2.66 percent of gross domestic product and above the proposed target for a deficit of 159 billion reais this year, excluding local governments.
The target, proposed by the government earlier this month, needs to be approved by Congress before Aug. 31 to take effect. The vote is expected later on Wednesday, after the new goal was approved by a joint congressional committee late on Tuesday. ($1 = 3.167 reais) (Reporting by Silvio Cascione; Writing by Bruno Federowski; Editing by Chizu Nomiyama and Jeffrey Benkoe)