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UPDATE 1 – Brazil’s debt set to stabilize as economic growth grows – Treasury officials

(Adds comments from tax officials)

BRASILIA, Aug 18 (Reuters) – Brazilian Finance Minister Bruno Funchal said on Wednesday that the debt ratio is expected to stabilize at around 81.2% amid economic growth.

Speaking to the Congress Budgets Committee, Funchal said 2021 will be a difficult year, but Brazil’s budgetary position is now developing positively.

The challenge, he said, will be to keep the national debt stable with higher interest rates.

The Treasury Department pays more than 10% interest on 10-year bond issues, which reflects the cost of Brazilian risk and is higher than other emerging markets, he said.

“Our budgetary position still requires constant work to continue a consolidation process,” he said at a committee hearing.

High long-term interest rates make investments more expensive and stifle job creation, so Brazil must work to cut interest rates with organized public accounts, he said.

Every percentage point that increases the Selic reference rate adds 30 billion reais in interest payments and thus to public debt, Funchal said.

Reporting by Marcela Ayres Editing by Chris Reese and Mark Porter

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