Why are Brazil's Interest Rates So High?
Preprint
- 14 July 2002
- preprint
- Published by Elsevier in SSRN Electronic Journal
Abstract
Brazil's public debt is large and interest payments weigh dangerously on the government's budget. In 2001 interest expenditure amounted to 7,3 per cent of GDP. On a mark-to-market basis (that is considering the effect of exchange rate depreciation on the value of foreign currency-denominated bonds) interest expenditure reached 9 per cent of GDP. These figures are large, though not unusual in high debt countries: they are comparable to those observed in some European countries (Italy, Greece and Belgium) prior to monetray union. Two factors contribute to this level of debt service: the size of the debt and the average cost of the debt.Keywords
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