Brazil recorded in April a wider-than-expected budget surplus before interest payments due to seasonally high tax revenue that won’t change the trend of fiscal deterioration in Latin America’s largest economy, the central bank said on Tuesday.

The surplus that includes results of states, municipalities and state-owned companies was 10.2 billion reais ($2.84 billion), compared with a median forecast for a 1.9 billion-real surplus by analysts in a Bloomberg survey. The nominal deficit reached 13.2 billion reais in the month, versus the 23.6 billion gap projected by analysts.

While the so-called primary surplus came in better than forecast by analysts, it was still the lowest for the month of April since 2004. On a 12-month basis, the primary budget deficit expanded to a record 2.33 percent of gross domestic product and is expected to further deteriorate in coming months, according to Tulio Maciel, head of the central bank’s economic research department.

"The drop in the surplus for the year reflects falling revenue," Maciel told reporters in Brasilia.

Brazil’s budget prospects are one of the main challenges for Acting President Michel Temer, who has chosen former central bank chief Henrique Meirelles as Finance minister to help restore business and consumer confidence. Meirelles announced measures to mend what is forecast to become the worst budget gap in history this year.

Congress approved a proposal for the public sector to deliver a 163.9 billion primary budget deficit by the end of the year. The lawmakers’ green light prevented a government shutdown. 

A political crisis that led President Dilma Rousseff to temporarily stand down while she faces an impeachment trial has exacerbated the worst two-year slump in over a century. Investors and credit rating companies use the primary budget balance to gauge Brazil’s fiscal health.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE