BRASILIA, May 22 (Reuters) - Brazil's government expects Petrobras will pay out all of its extraordinary dividends, according to a revenue projection for this year, even though the state oil company has yet to make a decision on that.

"We consider the distribution of 100% of Petrobras' extraordinary dividends as the probable scenario," Treasury Secretary Rogerio Ceron said on Wednesday.

Despite the anticipated contribution from Petrobras, the Planning and Finance ministries raised Brazil's primary deficit projection to 14.5 billion reais ($2.81 billion) this year, up from 9.3 billion reais estimated in March.

At the end of April, Petrobras approved the distribution of 50% of the extraordinary dividends related to its 2023 results, stressing the remaining 50% would be kept in a fund for future disbursement, which the government indicated could happen by the end of this year.

Speaking at a press conference, Ceron said that Petrobras' announcement "is sufficient for us to consider it a probable distribution scenario," adding that the inclusion does not constitute "any kind of pressure."

The Planning and Finance ministries' bi-monthly revenue and expenditure report raised the year's dividend revenue estimate by 14.3 billion reais ($2.78 billion), with 13 billion reais expected from Petrobras, according to Ceron.

Petrobras' payment of extra dividends has been marked by back-and-forth decisions after the government-controlled board withheld the entire distribution in March, which surprised markets and caused its shares to plummet.

Last week, President Luiz Inacio Lula da Silva fired the company's chief executive and appointed Magda Chambriard to the position, tasking her with speeding up investments in shipyards, fertilizer plants, refineries, and natural gas lines to boost the Brazilian economy, raising fears of lower dividends to shareholders.

While considering the positive contribution of Petrobras' full extraordinary dividends to public accounts, the government did not account for the impact of extending a tax benefit program for the events sector in its report, saying that the bill, already approved by Congress, had not yet been turned into law by President Luiz Inacio Lula da Silva.


The new deficit projection corresponds to a 0.1% GDP shortfall, while the target for this year is to eliminate the primary deficit, with a tolerance margin of 0.25 percentage point of GDP in either direction.

The deterioration occurred mainly due to a 24.4 billion reais increase in primary expenses, which outpaced the expected 6.3 billion reais rise in total net revenues.

The calculation of the primary result for meeting the fiscal target excludes extraordinary expenses related to addressing historic flooding in the Rio Grande do Sul state, which have so far totaled 13 billion reais.

The government's forecast remains much more optimistic than that of private economists, who estimate a primary deficit equivalent to 0.7% of GDP for this year, according to a weekly central bank survey. ($1 = 5.1543 reais) (Reporting by Marcela Ayres and Bernardo Caram in Brasilia; Editing by Leslie Adler, Josie Kao and Sonali Paul)