Debt refinancing is a risk for Brazil, says Institute of International Finance

The debt to be refinanced in 2021 is equivalent to 18.5% of country's GDP

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Brazil is the country most threatened by the refinancing of public debt among emerging countries, according to a report by the Institute of International Finance (IFF).

The document, which gathers information about 450 banks and financial institutions from 40 countries, points to a difficulty faced by the country of reducing spents and limiting the increase in debt while hitting record debt maturities.

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The debt to be refinanced in 2021 is equivalent to 18.5% of GDP, the highest level recorded since 2005, according to a report by newspaper Folha de S.Paulo. This means that Brazil needs to raise BRL 1.4 trillion with the sale of bonds.

Head of the IFF’s Research Department for Latin America, Martín Castellano told Folha de S.Paulo that the Brazilian fiscal situation “requires a lot of debt issuance due to the shortening of terms and high repayments” and that “the risk it is the country facing an adjustment in potentially more difficult market conditions in the future ”, since few countries are able to reduce spending after a significant increase.

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In addition, IFF analyses that Brazil will hardly be able to reduce its debt in the face of the advancing COVID-19 pandemic and the need to pay emergency aid to the poorest again.

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