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The government predicts a deterioration of the public debt profile this year, with an increased concentration of debt on shorter-term and more volatile bonds.
Treasury Secretary Mansueto Almeida said that it was "the social protection scenario before retirement" and felt that the appetite of investors for long-term securities could increase if the country approves the reform, which would increase the potential. economic growth and progress on privatization (which reduces public debt).
According to the forecasts presented Monday by the National Treasury, the share of debt related to the variable rate should increase from 35.5% in 2018 to 38% to 42% in 2019, according to the reform the most pessimistic scenario (42%), according to the Treasury, embodies the approval of a reform below what has been discussed so far, whose milestone is the proposal of former President Michel Fear, approved by a special commission of Congress.
"This scenario does not exist," he replied, questioned by reporters about the deterioration of public debt in case of reform failure.
Mansueto said that the figures could be even more serious in case of non-approval of the reform. Congress
Since 2014, the public debt has increased from 56.3% of GDP to 77%. It is forecast to exceed 80 per cent in the coming years, a level well above that of middle-income countries, comparable to that of Brazil.
Since then, the share of floating rate bonds in the public debt has also increased. From 18.7% at the end of 2014 to 35.5% last year
Social Security reform is considered fundamental by the economic team to reduce public spending and adjust the accounts five years ago [19659002] Treasury forecasts also indicate that the percentage of debt maturing in 12 months should rise from 16.3% in 2018 to between 17% and 20%. The average duration of public debt decreases further, from 4.1 years to 3.9 years.
As a debtor, the government strives to extend the term of the debt and to direct its creditors to fixed-rate securities.
By 2019, the maturity volume of fixed rate securities will be considerable. expects that part of the demand will turn to the more unstable
. "As soon as pension reform is approved and fiscal adjustment continues, it will open up more foreign investment [investidores]which will allow for debt extension," said the secretary. .
Foreigners, who accounted for 21% of the country's creditors, now account for about 12%.
Selic's low rate, along with inflation, is currently helping the government by reducing the impact of floating-rate debt payments. The Selic is at 6.5% per year, which has reduced the average cost of debt to 9.37% per year.
However, badysts expect the Selic to rise again this year as a result of higher inflation due to a more complex external scenario and stronger domestic economic activity.
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