Brazil’s public debt level to rise by US$113 billion, with Selic at 13.25% -newspaper

RIO DE JANEIRO, BRAZIL – The cost of Brazil’s public debt is expected to increase by R$580.1 (US$113) billion in 12 months, with the prime rate (Selic) at 13.25% per year, the rate estimated by the financial market for 2022.

The chief economist calculated RYO Asset, Gabriel Leal de Barros, at the request of the Poder360 newspaper.

The economist calculated the additional amount to be paid if the BC (Central Bank) raises the Selic from 10.75% (February 2022) to 13.25% per year. The one percentage point increase announced Wednesday (May 4) already adds R$387.3 billion to the stock.

The increase was based on the R$7 trillion debt registered in February. At that time, the Selic rate was 10.75% per year.

Due to the strike by public employees, the Monetary Authority did not publish the March figures and said there was no forecast for the release of the data.

In February, the country’s gross debt – consisting of the federal government, INSS, states, and municipalities – fell to 79.2% of GDP (gross domestic product). The decrease amounted to 0.4 percentage points. The data comes from the Central Bank.

Interest rates are at 12.75% per annum. The Central Bank has signaled that it will readjust again at its next meeting in June.

The monetary authority raised the percentage to control inflation in the country, which reached 11.3% in the 12 months ended in March.

According to the central bank, interest payments on the debt totaled R$422.5 billion in the 12 months ending in February. In February 2021, when the Selic was at 2% per year, the cost was R$316.5 billion.

The last time the Selic reached 13.25% per year was in January 2017, at which time the debt level was R$4.399 trillion, or 69.8% of GDP. Today, the debt is R$3.85 trillion, more expensive than five years ago.

With information from Poder360