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By Jamie McGeever and Marcela Ayres
BRASILIA, April 30 (Reuters) - The Brazilian government’s primary deficit narrowed more than expected in March, but in nominal terms rose as a share of gross domestic product over the year, the central bank said on Tuesday.
The primary deficit, comprising the central government, regional governments and state-owned enterprises before interest payments are factored in, narrowed to 18.6 billion reais ($4.73 billion) in March from 25.1 billion reais in March last year.
That was also less than the median deficit of 21.5 billion reais forecast in a Reuters poll of economists, but was still the second biggest shortfall for the month of March since the data series began in 2001.
With the public finances under severe strain, Brazil’s government is trying to push through an ambitious overhaul of the social security system, which it hopes will save over 1 trillion reais over the next decade.
On Monday, the Treasury officially recognized that budget constraints and weak revenues would see public investment grind to a virtual standstill this year, potentially to a new record low below 0.5 percent of GDP.
The central bank’s figures on Tuesday showed that the central government - comprising the federal government, central bank and social security system - posted a primary deficit of 20.4 billion reais in March, while states and municipalities registered a surplus of 1.74 billion reais.
The accumulated primary deficit over the 12 months to March reached 99.3 billion reais, or 1.43 percent of GDP. The end-2019 target is for a deficit of around 132 billion reais.
In nominal terms, once interest payments are included, Brazil’s deficit was 62.2 billion reais in March. That brought the accumulated total over 12 months to 483.8 billion reais, or 6.98 percent of GDP, up from 6.95 percent the month before, the central bank said.
Public sector net debt last month was 3.755 trillion reais, down 0.3 percentage point to 54.2 percent of GDP, while gross debt rose to 5.431 trillion reais. That marked an increase of 0.9 percentage point to 78.4 percent of GDP.
$1 = 3.9340 reais Reporting by Marcela Ayres and Jamie McGeever Editing by Marguerita Choy