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BRASILIA, Jan 26 (Reuters) – Brazil’s outstanding public debt is expected to increase this year up to 14%, the Treasury said on Thursday, and it stressed that commitment to the public accounts balance will be essential to lengthen the country’s debt profile.
In its Annual Financing Plan, the Treasury set the 2023 public debt target at a range between 6.4 trillion reais and 6.8 trillion reais, up from last year’s 5.951 trillion reais ($1.2 trillion).
The amount of debt maturing in the short term increased after eight consecutive primary budget deficits and a greater issuance of short-term bonds in 2020 due to the pandemic, said the Treasury.
“In this scenario, the commitment to fiscal balance will be essential to establish, in the market, favorable conditions for greater issuance of bonds that promote the improvement of the federal government’s debt profile,” it said.
The Treasury expects the average maturity of Brazil’s debt profile this year to reach between 3.8 and 4.2 years, implying it could worsen from 3.9 years in 2022. It also estimated the share of debt maturing over the next 12 months to be between 19% and 23% this year, compared to 22.1% last year.
The market awaits the presentation of a new fiscal anchor by the new government of Luiz Inacio Lula da Silva after the leftist president assured, even before taking office in January, Congress approval of a multi-billion spending package that bypasses the constitutional spending cap to meet campaign promises.
The Treasury assessed that the proposal for a new fiscal framework based on the level of public debt and political efforts to approve a tax reform should favor public debt management. So far, the government has indicated it would present a new fiscal rule by April, without detailing it.
Brazilian gross debt ended 2022 at 73.3% of GDP, estimated the Treasury, below the level seen before the pandemic, but still above the 61% average of emerging countries, “reinforcing the importance of measures to control public spending and improve tax collection.” ($1 = 5.0873 reais) (Reporting by Marcela Ayres; Editing by Leslie Adler)
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