Brazil's federal public debt ended August at R$ 9.29 trillion, according to the monthly report of the National Treasury, released on Monday by the Finance Ministry. That is the total the government owes investors who bought its bonds. Spread across the country's roughly 212 million people, it comes to more than R$ 43,000 per person.
The most important change of the month was in the debt's makeup. The share of bonds linked to the Selic, Brazil's benchmark interest rate, rose from 51.11% to 52.74% between July and August, the highest level in a data series that starts in December 2000. In June these bonds were 49.32% of the total; now more than half the debt automatically becomes more expensive whenever the Central Bank raises rates.
Overall, the debt grew just 0.04% in August from July, when it stood at R$ 9.28 trillion, according to news site G1. Interest added to the balance, R$ 88.39 billion in the month, was almost offset by net redemptions of R$ 84.43 billion, meaning investors pulled out more money than the government raised in new bonds. The result is a bill that rises almost entirely on interest, like a credit card statement that grows with no new purchases.
Explainer: what Selic-linked bonds are
The Selic is Brazil's basic interest rate, set by the Central Bank's monetary policy committee, the Copom, and it anchors everything from loan rates to savings returns. "Selic-linked" bonds pay whatever that rate is, rather than a rate fixed on the day of purchase. So each time the Copom raises the Selic, the cost of that slice of the debt rises with it, with no renegotiation involved.
What comes next
The Treasury saw this coming. In its July report, released in late August, it revised its annual borrowing plan and now expects Selic-linked bonds to make up between 49% and 53% of the debt by the end of 2026, according to Folha de S.Paulo; August's 52.74% is already close to the top of that range. The official forecast is for the debt to end the year between R$ 9.7 trillion and R$ 10.3 trillion.
Other figures in the report show the weight of interest. The average cost of the debt over 12 months rose from 12.45% to 12.59% per year between July and August. The average maturity of the bonds lengthened slightly, from 4.05 to 4.10 years, while the Treasury's liquidity reserve, cash set aside to pay the debt, fell from R$ 1.37 trillion to R$ 1.208 trillion.
At a press conference, Helano Borges Dias, the Treasury's coordinator general of public debt operations, noted that in the early 2000s, the last time the floating-rate share was near this level, the other half of the debt was tied to the exchange rate, a riskier setup. The way out, he said, runs through the budget: a primary surplus means the government spends less than it collects before paying interest.
"Looking ahead, the expectation is that we can return to primary surpluses, which is the structural condition for us to reduce the floating-rate share of the debt," Borges said.