Brazil's 2022 Gross Debt Falls To Lowest Level In More Than 5 Years

• Brazil's government debt as a share of gross domestic product ended 2022 at its lowest level in more than five years, highlighting a significant but not sustainable fiscal improvement as the debt dynamics should resume an upward trend this year.
• Brazil's gross debt fell to 73.5% of GDP in December from 74.6% in November, accumulating a 4.8-point contraction in the year, to its lowest ratio since July 2017, when it reached 73.2%. The reduction was mainly led by a nominal rise in GDP, which is also affected by inflation.
• Notably, Latin America's largest economy has shown more vigour than initially expected on the back of solid service activity, an improved job market and government fiscal stimulus ahead of a presidential election in October. However, the impressive gross debt reduction was also helped by public net debt redemptions, as the Treasury chose to reduce bond issues while Brazil's benchmark interest rate was aggressively hiked to battle inflation.
• The country's public sector recorded a primary deficit of 11.8Bn reais ($2.3Bn) in December but a 126Bn reais surplus for 2022, its second straight positive annual print and best result for a year since 2011. The solid annual performance came just two years after the record 2020 deficit of 703Bn reais, boosted by pandemic spending.

(Source: Reuters)