The payment of the internal public debt

This paper proposes a change in public debt policy, based on the placementof new bonds with maturities between l and 30 years. By modifying the conditions of asimilar proposal presented by Giambiagi and Zini, it is shown that if all the internal publicdebt were transformed into a debt of 7 years, paid through a monthly fix payment, withan interest rate of 12% in US$ and a clause for payment in foreign currency, the primarysurplus of the Federal Government required for internal public debt service and paymentsof interest on external public debt could, under certain conditions, be less than 2.5% ofGDP. Afterwards, some parameters are changed in order to present a menu of alternatives,which imply a more rapid payment and require a higher primary surplus in the first year. Itis concluded that, with a fiscal effort of around 2.0% of GDP related to the data of 1993,Brazil could adopt a stabilization plan with a fiscal and monetary toughness very similar tothat of the Convertibility Plan adopted in Argentina in 1991. JEL Classification: H63.