Brazil's gross debt hits 76.2% of GDP in February amid high interest costs

BRASILIA (Reuters) - Brazil's public sector gross debt rose in February from the previous month, central bank data showed on Tuesday, driven by the country's heavy interest burden.

The debt load reached 76.2% of gross domestic product (GDP), up from 75.7% in January, in line with economists' projections in a Reuters poll.

Under the methodology used by the International Monetary Fund, the ratio climbed to 88.7% of GDP from 87.1%, as the IMF includes all government bonds held by the central bank, while the Brazilian central bank only considers those sold to the market in repo operations.

According to the central bank, the increase in gross debt - a key indicator of a country's solvency - was mainly due to interest payments during the month.

As it battles inflation running above the official 3% target, Brazil has faced high debt servicing costs amid an aggressive monetary tightening cycle. Since September, policymakers have raised interest rates by 375 basis points to 14.25%.

The public sector posted a primary deficit, which excludes interest payments, of 18.973 billion reais ($3.23 billion) in February, narrower than the 31.5 billion reais shortfall expected by economists in a Reuters poll.

The result was helped by a 9.244 billion reais surplus from regional governments and a 299 million reais surplus from state-owned companies.

The central government's primary deficit reached 28.517 billion reais in February and 14.194 billion reais in 12 months, equivalent to 0.12% of GDP. President Luiz Inacio Lula da Silva's administration is targeting a zero primary deficit this year, with a tolerance margin of 0.25% of GDP.

($1 = 5.8718 reais)

(Reporting by Marcela Ayres; Editing by Andrew Cawthorne and Bernadette Baum)