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Brazil’s debt-to-GDP ratio tops 70% mark in August

September 30, 2016 by

Brazil’s public sector rolled up a whopping R$22.3 billion primary budget deficit in August, up sharply from R$12.8 billion in July, the Central Bank reported Friday. August performance brought the 12-month deficit up to R$169 billion, from R$154 billion as of July. The deficit is now perilously close to the calendar 2016 limit of R$170.4 billion. Meanwhile, the ratio of national debt to GDP rose in August to 70.1 percent, up from 69.5 percent as of July. Economists have pointed to 70 percent as a choke point for the debt-to-GDP ratio, with international credit agencies likely to downgrade Brazil’s sovereign rating. Brazil’s government has been racking up deficit because of a sharp decline in revenues, caused by Brazil’s economic recession. Meanwhile, government costs have tended to rise with inflation, currently running at nearly 9 percent.

Link to Central Bank release

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