Brazil public debt drops for 6th consecutive month, reaching 82.7% of GDP in August

RIO DE JANEIRO, BRAZIL – Even if the opposition criticizes the Brazilian economy almost daily for political reasons and says it sees black clouds gathering, there are not many countries in the world at the moment that are able to reduce their debts despite the pandemic.

The public debt registered the sixth consecutive month of decline in August and reached 82.7% of GDP. The figure was released Wednesday (29) by the Central Bank (BC).

The trajectory is downward since the indicator reached a historical peak of 89.4% in February this year. In April, the debt/GDP ratio was already at 85.3%, dropping to 83.2% in June and 83.1% in July.

With last month’s result, the indicator returned to a level below that of June last year. Before the pandemic, the debt registered figures around 75% of the GDP.

The main reason for the drop in August is the growth in the nominal GDP. Since the GDP is the denominator of the relation with the debt, the result is a drop in the indicator when it increases.

On the other hand, new debt issues and the incorporation of interest contributed to reducing this fall.

The market closely follows the indicator because it measures the country’s ability to pay its debts. The number encompasses the result of the federal government, the National Institute of Social Security (INSS), and state and municipal governments.

The Independent Fiscal Institute (IFI) projection in the September report is that the debt will rise again and close the year at 85.6%. The agency estimates that the effect of inflation that causes nominal GDP to rise should slow down in the coming months, causing the indicator to rise.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error