Brazil: Government’s gross debt falls to 77.1% of GDP in September

The government’s gross debt in Brazil fell as a proportion of the Gross Domestic Product (GDP) from 77.5% in August to 77.1% in September, according to data from the Central Bank (BC).

The amount rose from R$7.2 trillion (US$1.4 trillion) in nominal terms to R$7.3 trillion.

According to the Central Bank (BC), the monthly variation in debt can be explained mainly by the effect of nominal GDP growth, which contributed to reducing the debt by 0.7 percentage points and net debt redemptions, down 0.4 percentage points.

On the other hand, the appropriate nominal interest rates pushed the percentage 0.6 points up, and the effect of the exchange devaluation had an upward effect of 0.2 points.

The Central Bank also showed that the net debt of the non-financial public sector had a slight monthly increase of 0.1 percentage points (p.p.) compared to GDP in September, to 58.3%, which the Central Bank considers stable.

According to the Central Bank, the monthly variation can be explained by the appropriate nominal interest rates, which pushed the debt 0.8 percentage points higher, and by the effect of the variation in the basket of currencies that make up the net external debt, up 0.5 percentage points.

In contrast, the 4.4% devaluation of the Real in September reduced the debt by 0.6 percentage points, nominal GDP growth by 0.5 percentage points, and the primary surplus by 0.1 percentage points.

Since Brazil is a creditor in foreign currency, the rise in the dollar reduces the net debt, which discounts the international reserves.

With information from Valor Econômico