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By Alonso Soto and Lisandra Paraguassu

BRASILIA, July 5 (Reuters) - Brazil will set a 2017 primary budget deficit smaller than the 170.5 billion reais ($51.69 billion) expected for this year, but the final figure will depend on the sale of assets, three government officials told Reuters on Tuesday.

Finance Minister Henrique Meirelles said earlier on Tuesday that the deficit plan would be announced on Thursday as the government debated a target closely monitored by investors worried about the country's financial health.

Meirelles has proposed a smaller deficit and Interim President Michel Temer is expected to back it, despite resistance from some members of his cabinet who want a larger deficit to stimulate an economy mired in its worst recession in decades.

The government is considering increasing the Cide gasoline tax to raise revenues in 2017, one of the officials said on condition of anonymity.

Senator Rose de Freitas, the leader of the government in Congress, told Reuters that the administration was considering a budget deficit of between 150 billion and 160 billion reais.

Market economists have been expecting a smaller deficit for next year and some question the government's commitment to austerity if it opts for a bigger shortfall.

Economists forecast the central government, which does not include the results of states and municipalities, would post a deficit of just 110.8 billion reais in 2017, according to a monthly poll published by the finance ministry.

"The decision will be a technical one and it's up to the economic team," said a senior adviser to Temer briefed on the matter. "Temer will support Meirelles in his decision."

The government is calculating the possible proceeds from next year's sale of state assets such as hydroelectric plants, roads and oil fields, said the official who asked for anonymity to speak freely. He added that revenues from those sales could top 30 billion reais next year.

The primary budget deficit, or the shortfall before interest debt payments, is a key gauge of a country's capacity to repay its debt.

($1 = 3.2984 Brazilian reais) (Additional reporting by Silvio Cascione and Leonardo Goy; Editing by Peter Cooney and Andrew Hay)