Brazil's government debt climbs in May
Brazil's government debt increased in May, despite the reduction of the country's benchmark interest rate, highlighting the urgency of progress in economic reforms aimed at reducing government spending.
The country's debt totaled 3.25tn reais (US$986bn) in May, up 0.27% from April. Compared with the end of 2016, the debt rose 4.53%, according to a report from the national treasury.
The country's debt is expected to end the year at between 3.45tn reais and 3.65tn reais, according to treasury projections, compared with 3.11tn reais at the end of 2016.
The growth in the country's debt came despite the reduction in the benchmark interest rate. With the slowdown in inflation, central bank has reduced the Selic base rate by a total of 400 basis points since the start of the current easing cycle in October to the current 10.25% per year, and more rate reductions are likely to take place in the coming months, according to economists.
The continued expansion in the country's debt highlights the importance of progress in economic reforms, particularly reforms to the pension system, which are considered crucial to control government debt and expenses in the long term. However, the current political turbulence looks likely to delay the approval of these changes.
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