By Marcela Ayres
BRASILIA (Reuters) -Brazil’s gross debt rose less than expected in 2024, supported by the central bank’s sale of foreign reserves in December, a month marked by intense exchange rate volatility amid fiscal concerns, official data showed on Friday.
A key indicator of fiscal solvency, the gross debt-to-GDP ratio decreased to 76.1% in December from 77.7% in November, while economists polled by Reuters had anticipated it would close the year at 77.0% of gross domestic product.
As a result, the annual debt increase amounted to 2.2 percentage points, according to the central bank, driven primarily by heavy interest payments.
In December, the central bank carried out massive foreign exchange interventions, including spot dollar sales and dollar repurchase agreements totaling over $30 billion, amid a sharp weakening of the Brazilian real.
However, about a third of the gross debt reduction from these operations is expected to reverse when the central bank eventually buys back the dollars it sold in auctions with repurchase agreements, said the deputy head of the bank’s statistics department, Renato Baldini.
Brazil’s currency fell as low as 6.30 per U.S. dollar during December, a month typically marked by outflows from company profit remittances but further weighed down by investor concerns after the government’s late-November spending cut package disappointed markets.
On Friday, the country’s currency was trading around 5.81 reais per dollar.
The central bank data also showed that the public sector posted a primary surplus of 15.745 billion reais ($2.71 billion) in December, exceeding the 10.2 billion reais surplus expected in a Reuters poll.
The central government’s primary surplus reached 26.728 billion reais in December, bringing the annual deficit to 45.364 billion reais, or 0.38% of GDP, marking a significant improvement from the 2023 deficit of 2.42% of GDP.
The Treasury said on Thursday that the annual result met the fiscal target of a zero primary deficit, with a tolerance margin of 0.25% above or below, as the exclusion of certain expenses for compliance purposes – such as costs related to unprecedented flooding in the state of Rio Grande do Sul – left the 2024 shortfall at 0.09% of GDP.
($1 = 5.8167 reais)
(Reporting by Marcela Ayres; Editing by Chizu Nomiyama and Alistair Bell)
