Public debt closes out 2020 above $930 bi
Pulled up by costs linked to the efforts to tackle the pandemic of the novel coronavirus (COVID-19), Brazil’s federal public debt—encompassing the country’s domestic and foreign debts—closed out 2020 in $930.8 billion, the Economy Ministry reported this week. The amount is up 17.9 percent from 2019, when the debt stood at $784.4 billion.
With the high number of bonds issued in December, the ceiling of 2020’s Yearly Financing Plan (PAF)—which stipulated that the public debt was to close the year between $854.6 billion and $910 billion—was exceeded.
The possibility that the indicator could close out 2020 above the established interval had been admitted last month by the Treasury, according to which the improvement in market conditions in the last two months of 2020 allowed the Treasury to release more bonds to restore the debt cushion (financial reserves used in an emergency), reintroducing the amount used to cover pandemic-linked costs, especially the emergency allowance.
Domestic and foreign debts
The Federal Internal Public Bond Debt (DPMFi in the original Portuguese)—the section of the public debt in the domestic market—had its stock expanded by 4.67 percent in December, going from $845.9 billion to $889.3 billion. This growth in the debt came as a result of the positive appropriation of interest, reported at $5.9 billion (when the interest of the debt is incorporated into the total month after month) and by the record-breaking monthly net issuance of $33.5 billion (when the Treasury issued more securities than it retrieved).
The stock of the Federal Public External Debt (DPFe), taken from the international market, went up 3.79 percent in the last month of 2020, closing out the year at $46.85 billion. Of this total, $42.85 billion refers to the bond dent in the international market, and $4 billion to contract debt (with banks and international entities).
Resources
By means of the public debt, the National Treasury issues public bonds to borrow money from investors and fulfill financial commitments. In exchange, it agrees to return funds after a few years, when the bond is due, with some return. The correction may follow the Selic rate (the economy’s benchmark interest rate), inflation, exchange, or come pre-fixed. Due to the COVID-19 pandemic, the government had to issue more bonds last year.
In December, financial institutions held the biggest share of the public debt (29.62%). The stock in this group went from $249.7 billion to $262.3 billion from November to December. Next come investment funds, with 25.98 percent, social security funds, with 22.65 percent, foreign investors (9.24%), the government (3.77%), insurers (3.68%), and others (5.07%).
