Investors: What are the factors that cause public debt to vary?

In addition to the difference between budget revenue and expenditure, there are other components that cause financing needs to vary and that result in an increase or reduction in debt issuance.

Therefore, in addition to the budget deficit, the following variables should be considered:

• Net change in financial assets: difference between the flows recorded in expenditure and revenue, resulting from financial rights held. These include financial rights resulting from the acquisition/sale of credit securities (bonds, shares, quotas) or the granting/repayment of loans.
• Privatisation revenues to be applied to reducing public debt: the Privatisation Framework Law establishes that one of the objectives of privatisation operations is to promote the reduction of public debt in the economy. Thus, by Resolution of the Council of Ministers of the 12th Government, a minimum percentage of 40 percent of privatisation revenues must be channelled towards reducing public debt. The existence of this financial revenue, without impacting the budget deficit, makes it possible to reduce the volume of new debt issues required to meet financing needs.

Other factors, of lesser importance, that may justify differences between the budget deficit and the variation in public debt:

• capital gains and losses on debt issuances and amortizations,
• the issuance of promissory notes in favor of international organizations,
• exchange rate variations associated with debt denominated in foreign currency.