Deal with BNDES could bring debt/GDP to lowest value since 2020, say analysts

The agreement between the federal government and the National Bank for Economic and Social Development (BNDES ) for the bank to return BRL 90 billion to the National Treasury should lead to a reduction of about 1 percentage point in the ratio between public debt and Gross Domestic Product (GDP ), with chances of being the lowest level since the beginning of 2020.

The debt/GDP ratio ended July at 77.6%. The value is the same as the new projection of the Ministry of Economy to the end of 2022, taking into account the conclusion of the agreement with BNDES for the payment of the second installment of the amount that the bank needs to return to the Treasure .

With the movement, the debt between BNDES and the Union referring to the amounts destined to the bank between 2008 and 2014 would be settled. The initial forecast was that the reimbursement process would be completed by 2040, but the schedule was brought forward.

The process was determined by the Federal Court of Auditors (TCU ) in 2021, and BNDES had already returned the first installment in the same year. However, there was a judicialization regarding the payment of the second half, since the bank claimed that it would have losses if it anticipated the return, explains Tiago Sbardelotto, economist at XP.

“But the results of the first semester were very good, and it ended up giving a certain push for the TCU not to accept the arguments and determine the return”, he says. In the second quarter, BNDES recorded a profit of R$ 11.7 billion, 120% more than in the same period last year.

For the economist, the anticipation makes “complete sense”, considering that the institution has the resources currently available even without taking into account the high profits in the first semester, at the same time that the continuity of the amounts in the bank generates a cost of about R$ 2 billion to the Treasury annually, and the resource “can be better used”.

The economist calculates that the return should generate a drop of 1 percentage point in the debt /GDP this year, and that the government’s forecast, of a final value of 77.6%, is consistent with the current situation.

In the case of XP, the forecast is for a final value of 79.2%. The difference is due, according to Sbardelotto, to different projections for the so-called “GDP deflator”. The term refers to the price level of all new goods and services produced by an economy.

Historically, says the economist, the deflator tends to be just over 1 pp above the Broad Consumer Price Index (IPCA ), but the government expects an even higher deflator in 2022. XP, on the other hand, expects a lower deflator than inflation, with the expectation of a drop in commodity prices, which would lead to a lower nominal GDP and, therefore, a debt number larger.

“It would rise not because of the government spending more, even with the expectation of a worsening of the primary result due to higher spending. The result is still in a comfortable situation, it should have a surplus. It’s more a matter of statistics,” he explains.

For Sbardelotto, most of the good performance of the debt/GDP ratio, falling month after month, it is conjunctural with revenue benefiting from a combination of favorable internal and external scenarios.

André Coelho, economist at Ativa Investimentos, points out that the value will not impact the primary result, only debt relief. According to Ativa’s projection, the debt/GDP ratio will end the year at 78%, and he also believes that the government’s projection makes sense.

He points out, however, that the measure “is something short-term, it does not impact projections for the coming years”.

“The abatement schedule was until 2040, but today’s idea is to bring these installments forward to alleviate fiscal pressures”, observes Coelho.

In this sense, the measure should not have an impact in the coming years. For 2022, the economist expects a “significant” drop in the ratio, also around 1 pp

With information from Estadão Content