Senate Aims for 80% GDP by 2024

Brazil is facing a looming debt crisis as its public debt is expected to reach 80% of GDP by the end of 2024, a higher projection than the government’s optimistic estimate of 76.6%. The Senate’s Independent Fiscal Institution (IFI) highlights the challenges in sustainable public spending despite anticipated economic growth.

With Brazil’s gross debt at R$ 8.8 trillion ($1.61 trillion) and recent increases in the basic interest rate, government financing has become more expensive. The IFI warns that unsustainable debt growth could limit fiscal space and lead to a confidence crisis.

Despite an upward revision in the GDP growth forecast for 2024, the IFI cautions that it may not significantly impact the debt-to-GDP ratio. Challenges in meeting the zero-deficit target for 2024 and 2025 persist without additional measures.

The IFI criticizes government practices that undermine fiscal credibility, such as financing policies outside the budget. Concerns about overestimating revenue and excluding expenses from target calculations further cloud the sustainability of Brazil’s public debt trajectory.

As Brazil navigates economic growth and fiscal challenges, maintaining a balance between growth initiatives and responsible fiscal management is crucial for long-term stability.