BRASILIA: Brazil's government posted a primary budget deficit of 3.6 billion reais ($670 million) in October, the Treasury said on Thursday, by some distance the smallest deficit this year thanks to a near-10% rise in net revenues from a year earlier.

It was the second-largest October shortfall on record behind 2015, but significantly less than the 19.15 billion reais deficit economists in a Reuters poll had forecast, taking the deficit, excluding interest payments in the first 10 months of the year, to 681 billion reais.

That is more than 10 times the January-October deficit last year of 63.9 billion reais, the Treasury said.

The deficit in the 12 months to October totaled 725.6 billion reais, or 9.8% of GDP. The government this week lowered its 2020 deficit forecast to 844.3 billion reais, or 11.7% of GDP, from 880.5 billion reais, or 12.3% of GDP, assuming the economy shrinks this year by 4.5%.

Net revenue in October rose 9.8% in real terms from the same month last year to 133.1 billion reais, but were 11.6% lower in the first 10 months of the year at 959 billion reais, the Treasury said.

Spending in October was 21.8% higher at 136.7 billion reais, almost entirely due to measures aimed at cushioning the COVID-19 blow to individuals, businesses and local governments.

"It should be noted that almost all of these expenses, although mandatory, are of a continuous nature and must remain confined to the calendar year 2020," the treasury said.

So far this year, primary expenditure on tackling the crisis has reached 468.9 billion reais.

Waldery Rodrigues, special secretary to the economy ministry, said on Tuesday that the hit to Brazil's government primary budget balance this year from the COVID-19 pandemic will be 615.1 billion reais.