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MINISTÉRIO DA FAZENDA Secretaria do Tesouro Nacional

MINISTÉRIO DA FAZENDA Secretaria do Tesouro Nacional. 5 th Annual OECD/World Bank Bond Market Forum Comments on the Monday Morning Session EMERGING MARKET DEBT demand & supply factors in 2003 and ahead. Joaquim Vieira Levy Secretário do Tesouro Nacional Washington, June 2003.

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MINISTÉRIO DA FAZENDA Secretaria do Tesouro Nacional

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  1. MINISTÉRIO DA FAZENDASecretaria do Tesouro Nacional 5th Annual OECD/World BankBond Market ForumComments on the Monday Morning SessionEMERGING MARKET DEBTdemand & supply factors in 2003 and ahead Joaquim Vieira Levy Secretário do Tesouro Nacional Washington, June 2003

  2. Brazil: Understanding Debt Dynamics • Debt management is closely linked to the overall fiscal stance and prospects. Fiscal relaxation in the mid 1990s proved to be costly, despite the improvements in debt management occurred since and the relative depth of Brazilian financial markets. Actual and Alternative Debt –GDP Path Public Sector Fiscal Results surplus deficit Alternative path: 3,5% of GDP surplus throughout the second half of the 1990s

  3. Cornerstone of Fiscal Strategy:Reduce the Debt/GDP ratio 60% 40% 2006 2010 By late March 2003 it was already close to 54%

  4. …What about foreign debt? • Changes in market sentiment throughout 2002 created significant turbulence, despite the nimble response of the economy to the changing environment. A BOP swing of about 3 points of GDP was achieved without a recession. • Successful sovereign issuance, with CAC. C-bond price doubling. Current Account Deficit

  5. Domestic debt Return of Fixed-rate instruments decline in premia in floating rate instruments

  6. Plumbing & Relations in Brazil Clear Public Policies – Curbing Debt/GDP ratio – Continued improvement of regulations Timely, comprehensive, accurate data Well “filled” yield curve and clear program Access to Officials; good relation with domestic investors (e.g., mutual & pension funds) Non-deal Road Shows

  7. Further Improving the Quality of Debt Affordable Safety Net Enterpreneur ship Fiscal and Monetary Responsibility Social Security Reform Fiscal and Monetary Targets, Abiding to contracts, LRF Tax Reform, Capital Markets, Chapter 11 No non-sense reforms

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