Brazil Lowers 2021 Debt Forecast To 87.2% Of GDP From 96.7%

• Brazil’s Treasury on Thursday slashed its 2021 debt forecast although it said debt will still continue to creep higher in the coming years, the same day it reported a surprise government surplus for the month of March.
• Treasury now sees total government debt ending this year at 87.2% of gross domestic product, significantly down from a previous estimate of 96.7% in its last long-term outlook published in October.
• Nominal GDP growth and cash transfers to the Treasury brought forward from state-owned banks will improve the short-term outlook, but will not outweigh rising interest rates and sustained primary deficits over the longer term.
• If accurate, the new forecasts would mean last year’s debt of 88.8% of GDP would be the record high for Brazil’s debt. In the first quarter of the year the government ran a surplus of 24.4Bn reais, compared with a 2.9Bn reais deficit in the same period last year. The swing was due to a 7.6% increase in revenue, in real terms.

(Source: Reuters)