BRASILIA (Reuters) -Brazil's government debt as a percentage of gross domestic product rose to 75.0% in January, despite a strong primary surplus in public accounts driven by interest expenses, central bank data released on Thursday showed.
The 0.7 percentage point increase in gross debt from the previous month was primarily attributed to the impact of nominal interest accrued, reaching 79.9 billion reais ($16 billion), a 52.8% surge compared to the same period last year.
The uptick was influenced by currency swap operations, which incurred a loss of 10 billion reais, contrasting with a gain of 16.1 billion reais in January 2023, said the central bank.
Interest charges are also affected by the growth in the debt stock and associated costs.
Despite the central bank reducing interest rates by 250 basis points since the beginning of a monetary easing cycle in August, the Selic benchmark rate remains high at 11.25%, compared with annual 4.49% inflation.
Over 12 months, the interest expense reached 6.82% of GDP, marking the highest level since June 2017.
Central bank data also revealed that the Brazilian public sector achieved a primary surplus of 102.146 billion reais ($20.66 billion) for the month, surpassing the 99.45 billion reais forecast in a Reuters poll.
This outcome, boosted by increased public revenue from the resumption of federal taxes on gasoline and a new taxation system on closed-end investment funds, closely approached the 99 billion reais surplus recorded by the public sector in the same month last year.
However, over 12 months, public accounts remain in negative territory, with a primary deficit of 2.25% of GDP. The nominal deficit, which includes interest expenses, reached 9.06% of GDP, indicating a significant fiscal deterioration.
($1 = 4.9446 reais)