Brazilian Federal Public Debt Down to R$4.12 Trillion in October

RIO DE JANEIRO, BRAZIL – The Federal Public Debt (DPF) stood at R$4.12 trillion (US$1.03 trillion) in October. The indicator, which includes internal and foreign indebtedness, retracted 0.84 percent in nominal terms in relation to September. The data were released yesterday, November 26th, by the National Treasury in Brasília.

According to the Annual Borrowing Plan (PAF) for public debt, published in January by the Treasury, the trend is for DPF to close the year between R$4.1 trillion and R$4.3 trillion.

The Domestic Public Securities Debt (DPMFi) (in securities), in circulation in the domestic market, fell 0.68 percent, from R$3.99 trillion to R$3.97 trillion. Last month, there were more redemptions than issuances, with a balance of R$51.6 billion, which explains the reduction in the debt. On the other hand, interest totaled R$24.4 billion.

The appropriation of interest represents the progressive recognition of the rates correcting the interest on public debt. The rates are incorporated on a monthly basis into the debt stock, according to the index of each security.

The Foreign Public Debt retreated by 4.79 percent, ending October at R$154.7 billion.

The government borrows funds from investors to honor commitments through public debt. In exchange, it commits to return the money with some adjustment, which can be defined beforehand, in the case of fixed-rate securities, or follows the fluctuation of the SELIC rate, inflation or the exchange rate.

Composition

The share of SELIC-adjusted securities rose from 38.36 percent in September to 39.38 percent in October. The share of fixed-rate securities (with rates defined at the time of issue) dropped from 31.75 to 30.42 percent.

The share of inflation-linked securities increased from 25.78 to 26.27 percent. The share of the exchange rate, which includes the foreign public debt, dropped from 4.11 to 3.93 percent.

Impacts of the high dollar

The coordinator of Public Debt Operations, Roberto Lobarinhas, said the impact of the dollar’s rise on debt management is “very insignificant”.

“Debt management is carried out in such a way as to minimize any vulnerabilities or risks. The impact of this increase in the dollar is very insignificant,” he said.

He added that “there is no intention on the radar” for the National Treasury to take extraordinary joint action with the Central Bank as a result of the recent rise in the dollar.

Source: Agência Brasil