Brazil Net Debt - Gross Domestic Product (GDP) Ratio

The Net Debt of the Public Sector (DLSP) corresponds to the indebtedness of the non-financial public sector, along with the Central Bank of Brazil. The non-financial public sector includes the direct administration of the federal government, states and municipalities. It also includes the indirect administrations, which are: the public social security system and the non-financial state enterprises of the federation, states and municipalities. The companies of the Petrobras Group and the Eletrobras Group are not included in this list of non-financial state-owned enterprises for calculation purposes of public net debt. The Central Bank is included in the calculation of the net public sector debt, because its results are directly linked to the National Treasury.

The General Government Gross Debt (DBGG) encompasses all committed debts of the federal government, state governments and municipal governments in the private sector, the public financial sector and indebtedness to the rest of the world. Also included are operations committed by the Central Bank with public securities. The DBGG is one of the main references for assessing the solvency condition of Brazil by the global classification agencies.

Debt/GDP ratio is the calculation of public debt, specifically the DLSP, in relation to the Gross Domestic Product (GDP). The lower the Debt/GDP ratio of an economy, the greater the output of goods and services and the probability of the profits being high enough to pay off the debt.

In practice, the greater the public debt of an economy, the greater the risk of default in a country, so higher than expected readings of the indicator may have a negative impact on the Brazilian currency.