Federal Public Debt Exceeds R$4 Trillion for the First Time

RIO DE JANEIRO, BRAZIL – The Federal Public Debt (DPF) has exceeded the R$4 trillion (US$1 trillion) barrier for the first time in history. The indicator, which includes internal and external indebtedness, rose 2.03 percent in nominal terms, from R$3.993 trillion in July to R$4.074 trillion in August.

The data were released yesterday, September 26th, by the National Treasury.

Despite the hike, the DPF remains below the minimum forecast by the economic team. 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 circulation in the domestic market, rose 1.74 percent, from R$3.846 trillion to R$3.913 trillion.

Last month, the Treasury issued R$39.94 billion more than it redeemed, mainly in floating-rate securities (basic interest rates) and inflation-linked securities. The stock also rose due to the appropriation of interest, which totaled R$27.02 billion.

The appropriation of interest represents the progressive appreciation of the rates that correct the interest on the public debt. The rates are incorporated month by month into the debt stock, according to the index of each security.

The sharp rise in the dollar last month caused the External Public Debt to rise 9.55 percent in August. The stock rose from R$146.85 billion to R$160.87 billion, mainly due to the 9.92 percent appreciation of the US currency last month.

Breakdown

The breakdown of the DPF barely changed from July to August. The share of Selic-adjusted securities rose from 38.37 percent to 38.35 percent from one month to the next. The share of fixed-rate securities (with rates defined at the time of issue) rose slightly, from 31.05 percent to 31.44 percent.

The share of inflation-linked securities increased to 26.73 percent from 26.06 percent. The share of the exchange rate, which includes the external public debt, rose the most, from 3.85 percent to 4.15 percent.

The government borrows funds from investors to honor commitments through public debt. In exchange, the government undertakes to return the money with some correction, which can be defined in advance, in the case of fixed-rate securities, or follow the variation of the Selic rate, inflation or the exchange rate.

Source: Agência Brasil