Debt faced by Brazilian States Goes Up Another US$ 4 billion Due to Rising Dollar

05/16/2018 - 12h35

Some states that are already dealing with the hardships of having to tackle their budget deficits will have to deal with an additional difficulty: the dollar has risen consistently in recent weeks, impacting foreign currency debts.

From January to Tuesday, May 15th, the total external debt of Brazilian states increased by R$ 15.1 billion (US$ 4.1 billion). According to estimates based on data from Brazil's Central Bank and fluctuations in terms of the dollar exchange rate, the external debt of states went from R$ 97 billion (US$ 26.6 billion) to R$ 112.1 billion (US$ 30.7 billion).

On Tuesday alone, when the dollar reached R$ 3.66 - the highest exchange rate since April of 2016 - the external debt of states rose by R$ 1.2 billion (US$ 329 million).

The additional source of rising deficits did not strike all states equally, rather it affected precisely the states that were in a better fiscal situation - that is, at least until the end of last year.

Among these states, the one that was affected the most was Amazonas, where external debt grew 25% between 2016 and 2017, corresponding to 50% of the state's consolidated debt, which totals slightly over R$ 6.2 billion (US$ 1.7 billion).

Tagging along behind Amazonas in terms of states with the highest percentages of debt in dollars are Ceará (49% of a deficit of nearly R$ 12 billion - or US$ 3.3 billion); Pernambuco (43% of a 14.7 billion deficit - US$ 4 billion); Piauí (42.6% of a R$ 5 billion deficit - US$ 1.4 billion); and Acre, whose debt in foreign currencies corresponds to 40.8% of its deficit.

Translated by THOMAS MATHEWSON

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