CUSTO NA DÍVIDA PÚBLICA INTERNA DA REDUÇÃO DA VULNERABILIDADE EXTERNA BRASILEIRA ATRAVÉS DO AUMENTO DOS RESERVAS INTERNACIONAIS

Abstract

In the second half of the decade of 1990 and beginning of the present century Brazil suffered financial crisis when facing difficulties in obtaining external financing, what showed up its vulnerability. From 2003 it was adopted a policy of reduction of that vulnerability, by increasing current account surplus and foreign reserves. This paper aims to verify the cost of the reduction of the external vulnerability by increasing foreign reserves. This cost comes from the increase of the internal debt when governmental interventions in the foreign exchange market are sterilized and also from the difference between internal and external interest rates. The conclusion is that for maintain sustainability of internal public debt it is necessary to get fiscal primary surpluses. The sustainability is also influenced by the real internal interest rate and the growth rate of the economy. The cost of the accumulation of reserves can be reduced if foreign reserves are bought during temporary appreciation of the domestic currency.