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Brazil posts lower than expected primary surplus

Brazil's Finance Minister Joaquim Levy gestures during a hearing before the Finance Commission of the Chamber of Deputies, in Brasilia, on April 29, 2015.

[BRASÍLIA] Brazil posted a lower than expected primary budget surplus Thursday of 239 million reais (S$106.4 million) for March for a cumulative 12-month deficit of 39.2 billion reais, as the government struggles with a slumping economy.

The latest central bank data showed Brazil's public accounts in the red to the tune of 0.7 per cent of GDP, up from 0.64 per cent in February.

Overall, Brazil's accounts still showed a surplus of 19 billion reais - but this was down from 25.6 billion 12 months earlier.

In March, data showed a 1.5 billion reais surplus for the central government while regional governments were in the red by a combined 1.1 billion and state-owned enterprises by 970 million.

Brazil, the world's seventh-largest economy, closed out 2014 by posting its first primary deficit in a decade after December alone brought a 12.9 billion reais shortfall as the country battled rising inflation and an economic slump.

The primary surplus is comprised of current government spending minus current income from taxes. It also excludes interest paid on government debt.

Brazil ended 2014 with its worst current account showing in 13 years as its deficit hit 4.17 per cent of GDP and this year economists are forecasting a fifth straight year of low growth.

The International Monetary Fund forecasts GDP will drop around 1.0 per cent this year, in line with local forecasts, on raw materials price falls and political crisis with state-owned oil giant Petrobras caught in a huge graft scandal which has enveloped dozens of politicians.

Minister of Finance Joaquim Levy is seeking to right the ship with a raft of austerity measures including raising some taxes and targeted spending cuts - but his plans have run into resistence in Congress.