Gross debt rises to 82.93% of GDP in September and reaches its highest level in more than five years
According to Money Times, gross debt reached 82.93% of GDP in September, while net debt rose to 70.0%.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM MONEY TIMES · 2 MIN
The Brazilian government's gross debt reached 82.93% of GDP in September, according to Money Times, based on data from the Central Bank. The number rose from 82.87% in August and represents the highest level in more than five years.
For those who follow interest rates and exchange rates, the data shows the growing weight of debt on public accounts. According to the same report, interest on debt puts pressure on government spending. For The X-Trader News, this financial cost is an expense that does not convert into a public service and reduces space for other priorities.
Two factors helped offset the rise, according to Money Times. The first was the net redemption of bonds by the National Treasury. The second was the growth in economic activity, which increased the size of GDP in relation to the debt stock.
The current level is the highest since March 2021, when gross debt was 85.10% of GDP. During that period, spending on the Covid-19 pandemic put pressure on debt. The September indicator remains below that peak, but the upward movement raises a warning about the fiscal trajectory.
Public sector net debt also increased, from 69.3% of GDP in August to 70.0% in September. The two measures tell different stories: the gross reflects total obligations, while the net discounts government assets.
For the editorial line of this newspaper, the solution involves controlling expenses and predictability of fiscal rules, and not increasing taxes. The debate about balancing the accounts should gain ground in the coming weeks.
What changes for the investor
For those who operate the stock market, Nasdaq, interest rates and the dollar, the reading is to pay attention to the fiscal framework. Rising debt tends to keep the market's focus on interest rates and signals about public accounts, which can influence the perception of risk of Brazilian assets. The data released does not allow estimating effects on prices, and this analysis does not constitute a recommendation to buy or sell. Monitoring the Central Bank's upcoming releases helps to check whether the trend continues.
Automatically translated from Portuguese.
