Government debt in Brazil reaches 90% of GDP for the first time
RIO DE JANEIRO, BRAZIL – The gross government debt in Brazil rose from R$6.670 trillion in January to R$6.744 trillion in February, according to data from the Central Bank (BC). In relation to the Gross Domestic Product (GDP), the debt rose from 89.4% to 90%.
It was the first time in the entire historical series of the Central Bank that the indicator reached 90% of the GDP. The current methodology started in 2008.
The increase in public spending to mitigate the effects of the new coronavirus pandemic has set off a warning in the market. Concerns about the rapid growth of public debt became even greater. Analysts point out the rise as one of the main factors of doubt about economic growth recovery.
The market follows these numbers because they are references to assess the country’s ability to honor its commitments and, at the limit, the risks of default. When the gains from taxes and other revenues are not enough to cover its expenses, the government is financed by its creditors (individuals, companies, banks, etc.). In this scenario, investments in the country decrease, i.e., less money comes in.
According to the Central Bank, the monthly growth of debt can be explained mainly by net debt issues (0.5 point increase in the indicator) and the incorporation of nominal interest rates (0.4 point increase). In the opposite direction, the growth of nominal GDP acted (reduction of 0.4 points).
Source: Valorinveste
More: Brazil news in English, every day from The Rio Times.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
Brazil runoff, Sunday, October 25: Brazil runoff start time and results schedule. Latest: Brazil runoff polls, Flávio 51%, Lula 49%.