Brasília, 6/28/2004(Agência Brasil) - Federal government debt reached US$304.3 billion (R$946.7 billion) in May, the equivalent of 56.8% of GDP. In April the ratio was 56.5%.

According to the head of the Central Bank Economic Department, Altamir Lopes, a spike in the exchange rate, which rose 6.26% in May, caused the size of the debt to rise US$1.3 billion (R$4.2 billion) because of money-market debt indexed to the dollar and another US$3.3 billion (R$10.4 billion) because of debt service charges, also in dollars.

But Lopes points out that last December the the debt/GDP ratio was 58.7%, which shows that there has actually been "a significant reduction of 1.93 percentage points," a reflection of responsible fiscal policy, he said.

Another reflection of good government policy was the primary surplus in May, says Lopes, which was the best ever for May at US$1.8 billion (R$5.8 billion). That brings the surplus to US$12.3 billion (R$38.2 billion), the equivalent of 5.87% of GDP, for the January to May period.

Lopes also reports that Brazil's total government debt, which includes states and municipalities, reached US$409 billion (R$1.273 trillion), or 76.4% of GDP. In April it was 77.4% of GDP.

(Translator: Allen Bennett)