Brazil's public sector gross debt steady in January

BRASILIA, Feb 27 (Reuters) - Brazil's public sector gross debt held steady at 78.7% of gross domestic product (GDP) in January, central bank data showed on Friday, while economists polled by Reuters expected it to rise to 79.0% of GDP.

The public sector recorded a primary surplus of 103.689 billion reais ($20.17 billion) for the month, which traditionally posts positive balances, compared with the 103.2 billion reais surplus expected in the poll.

BY THE NUMBERS

• Brazil posted a nominal primary surplus of 40.062 billion reais in the month.

• In 12-month rolling terms, the primary balance was stable at a deficit of 0.43% of GDP.

• The nominal deficit, however, widened to 8.49% of GDP from 8.34% in December.

• The deterioration was driven by interest payments, which rose to 8.05% of GDP in January from 7.91% the previous month.

FISCAL PICTURE

• Interest costs remain under pressure from the benchmark Selic rate, which the central bank has kept elevated to guide inflation toward its 3% target amid market skepticism about the feasibility of achieving that goal.

• Such doubts have been amplified by the government's drive to expand public spending, a stance viewed as working against efforts to cool economic activity.

• The Selic rate indexes nearly half of Brazil's debt stock, which has also been rising.

• It has been held unchanged at 15%, its highest level in nearly 20 years, since July last year.

• Policymakers have signaled they are likely to begin an easing cycle at their next meeting, scheduled for next month.

($1 = 5.1400 reais)