UPDATE 2-Brazil Oct primary surplus less than forecast

Wed Nov 26, 2008 12:18pm EST
(Recasts, adds state companies, comments)
By Isabel Versiani
BRASILIA, Nov 26 (Reuters) - Brazil's consolidated primary budget surplus fell in October compared to a year ago as state companies posted record deficits for the month but lower interest payments kept the nominal budget at a healthy surplus.
Brazil posted a consolidated primary budget surplus of 14.47 billion reais ($6.19 billion) in October compared with a surplus of 15.35 billion reais in the same month in 2007, the central bank said on Wednesday.
The number was also below the medium forecast of 17.2 billion reais of nine economists surveyed by Reuters, with estimates ranging from 12.95 billion reais to 22.0 billion reais.
The main culprit were state companies, which posted a record deficit for the month of October of 2.8 billion reais.
Altamir Lopes, head of the economics department at the central bank, pointed to oil giant Petrobras (PETR4.SA: Quote, Profile, Research, Stock Buzz)(PBR.N: Quote, Profile, Research, Stock Buzz), which last month grappled with costly investments and royalty and tax payments.
In the 12 months through October, Brazil posted a primary budget surplus equal to 4.53 percent of gross domestic product compared with 4.6 percent of GDP in the year through September.
The primary budget surplus, which excludes interest payments, is closely watched by investors as a gauge of a country's ability to service its debt.
The nominal budget, which includes interest payments, scored a healthy surplus as the government earned 4.4 billion reais as a result of its currency swap auction operations, helping it slash the cost of its interest payments.
It was only the fourth month with this year with a nomimal budget surplus. Brazil usually runs a nominal deficit due to large principal and interest payments on debt.
The central bank profits when the variation of the real to the dollar is higher than the benchmark interest rate. Brazil's real BRBY fell nearly 12 percent in October as a global financial crisis scared investors away from riskier emerging market assets.
The government posted an overall budget surplus in October of 5.22 billion reais compared with a deficit of 528 million reais in the same month in 2007.
The weaker real also helped Brazil, which has more than $200 billion in international reserves, to reduce its public sector debt to 36.6 percent of GDP at the end of October, from 38.2 percent in September.
For the 12 months through October, Brazil posted an overall budget deficit of 1.1 percent of GDP, the best result since the central bank began tracking the data in 1991. (Reporting by Isabel Versiani; Writing by Ana Nicolaci da Costa; Editing by Tom Hals)