UPDATE 1-Brazil's primary surplus falls sharply in October

BRASILIA, Nov 26 (Reuters) - Brazil's consolidated primary budget surplus fell sharply in October from a year ago because of a slowdown in tax receipts and increased public spending, central bank data showed on Thursday.

The primary surplus fell to 13.8 billion reais ($7.95 billion) from 18.731 billion reais in October 2008, the bank said.

The government had been expected to post a primary surplus of 13.75 billion reais, according to the median estimate of 18 economists surveyed by Reuters. Estimates for the surplus ranged from 5.5 billion reais to 21.4 billion reais.

In the 12 months through October, Brazil posted a primary budget surplus equal to 1 percent of gross domestic product, far below the 1.56 percent minimum the government needs to meet its target for the year.

Investors monitor the primary budget surplus, which excludes interest payments, as a gauge of a country's ability to service its debt. In the 12 months through September, the primary surplus reached 1.17 pct of GDP.

Brazil's economy, the largest in Latin America, emerged from recession in the second quarter of 2009, and tax revenues, which had deteriorated rapidly in recent months, have only now started a slow recovery. Brazil's tax receipts firmed 0.9 percent in October from a year ago, after tumbling 11.3 percent in September.

Brazil's overall budget, which includes interest payments, ran a deficit of 1.006 billion reais in October, compared to a surplus of 9.502 billion reais a year earlier.

($1=1.734 reais)

(Reporting by Raymond Colitt; Writing by Elzio Barreto; Editing by John Picinich) Keywords: BRAZIL ECONOMY/BUDGET ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.