This article develops arguments in favor of recomposing the time to maturity ofthe domestic public bond’s debt and present calculations on the amount of tax required by different terms of payment of that debt, assuming that it is rescheduled. Two alternatives are presented and evaluated. Alternative one offers a collateral for the principal owed and calculates the flow of interest in relation to GDP during the repayment period. Alternative two is based on making gradual and small down-payments to repay the old debt within a new institutional framework. The interest rate in the two cases would fluctuate and be readjusted each semester. Both alternatives yield a substantial alleviation of the interest burden compared to the present policy. The main conclusion is that with a dollar long-term interest rate similar to the ones observed in the international markets (about 8% a year) plus 2% of country risk and a 3% a year GDP growth rate, the domestic public debt could be paid in 20 years if a yearly provision of only 0.7% of GDP is allocated to its payment. The calculations also show that the required primary budget surplus would decrease to the range of 2.1 % to 2.7% of GDP, facilitating the balancing of the budget

Revista de Economia Política 1993

v. 13, n. 2(50)