Public debt growth: The continuous battle

BRAZIL ECONOMICS - Report 28 Oct 2019 by Affonso Pastore, Cristina Pinotti and Marcelo Gazzano

Brazil’s gross public debt in relation to GDP is only slightly below 80%, nearly 30 percentage points higher than in 2013, and the main culprit for this growth is the uncontrolled increase of spending. The country needs to achieve reforms leading to control of this spending. To help muster political forces to approve these reforms and achieve fiscal consolidation, the first step was to enact the constitutional amendment to limit growth of primary expenditures. The recent enactment of the pension reform is an important step in this direction, but is not sufficient. With a primary deficit 1.5% of GDP, and considering the structural decline of the real interest rate, a fiscal effort (difference between the current primary deficit and the necessary primary surplus) greater than 2 percentage points of GDP is required to stabilize the debt/GDP ratio, according to estimates by the IMF. Therefore, even if the government respects the limits imposed by the spending cap, the debt/GDP ratio will continue to climb until at least 2023. The international comparison presented in this report shows that very few countries have such an unfavorable fiscal situation.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.