Brazil's debt set to rise fast this year

By
Tuesday, January 29, 2019

Brazil's public debt is likely to expand in double digits this year even with the benchmark Selic rate at a historic low, highlighting the urgent need for government measures to cut spending.

The federal government's overall debt is expected to reach 4.3tn reais (US$1.14tn) this year, representing a rise of 11% from 2018, according to the treasury.

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By comparison, last year, the debt increased 8.9% to 3.8tn reais.

The increasing mountain of debt will add pressure on the government of business-friendly President Jair Bolsonaro to secure congressional approval of a highly unpopular pension reform.

In past years, the expansion of public debt was generally attributed to Brazil's high level of interest rates but the Selic is today at a record low of 6.5%. The bloated pension system has instead become the main reason for the growing debt.