Edla Lula
Reporter - Agência Brasil

Brasília - In 2005 the interest on Brazil's debt came to US$ 71.054 billion (R$ 157.145 billion), equivalent to 8.13% of the Gross Domestic Product (GDP). Since the primary surplus (what the government saves to repay debt interest) came to US$ 42.270 billion (R$ 93.505 billion), there was a US$ 28.776 billion (R$ 63.641 billion) deficit in the nominal balance in 2005, after interest payments are subtracted.

Commenting on these figures, the head of the Central Bank's Economic Department, Altamir Lopes, said that "this is the highest interest ever" on the debt. "This has to do with the behavior of the interest rate," Lopes affirmed, recalling that the policy of raising the benchmark interest rate (Selic) over the course of last year had adverse effects on the part of the debt pegged to the Selic, which is set by the Central Bank.

Lopes explained that the government's program for financing the debt has led to a significant decrease in the part of the debt pegged to foreign currencies, while increasing the portion linked to the Selic. "Moreover, the accumulation of debt by itself implies greater interest expenditures."

Translation: David Silberstein