Brazil's public sector gross debt declines for the first time in over a year

BRASILIA, Nov 11 (Reuters) -

Brazil's government debt as a share of gross domestic product declined in September from the previous month, marking its first drop after 14 straight months of increases, central bank data showed on Monday.

The debt of Latin America's largest economy fell to 78.3% in September from 78.5% the previous month, also coming in below the 78.8% forecast by economists polled by Reuters.

According to the central bank, the main factor contributing to the gross debt reduction in September was nominal GDP variation.

Brazil's debt, considered high compared with its emerging-market peers, has sparked fiscal concerns, as the accelerated growth in mandatory spending under the administration of leftist President Luiz Inacio Lula da Silva has cast doubt on the government's ability to stabilize its public debt under new fiscal rules passed last year.

Markets are eagerly awaiting a spending-containment package the government pledged to present, though it is

yet to be released

.

Since Lula began his non-consecutive third term last year, the gross debt-to-GDP ratio has risen by 6.6 percentage points.

In September, Brazil's public sector posted a primary deficit of 7.3 billion reais ($1.28 billion), smaller than the 8 billion reais deficit forecast by economists. The 12-month deficit fell to 2.15% of GDP.

The central government recorded a 4 billion reais deficit for the month, while regional governments posted a 3.2 billion reais deficit and state-owned companies reported a 192 million reais deficit.

Last week, Treasury Secretary Rogerio Ceron said the central government would reach a

primary surplus

of nearly 40 billion reais in October, staying on track to meet its goal of eliminating the primary deficit this year, with a margin of 0.25% of GDP.

Ceron noted that in the coming months, the 12-month outcome would exclude significant expenditures that weighed on public accounts at the end of last year. ($1 = 5.7376 reais) (Reporting by Marcela Ayres; Editing by Ros Russell and Alex Richardson)