Brazil is facing a significant increase in government debt during President Lula’s term, with projections showing a rise from 71.7% to 84.1% of GDP by 2026, according to the Independent Fiscal Institution (IFI). Factors contributing to this growth include fiscal deficits and high real interest rates.
The IFI’s warnings about Brazil’s escalating debt levels highlight the importance of careful fiscal management and potential policy adjustments to ensure long-term economic stability. Collaborative research by Cepea at Esalq/USP and CNA sheds light on the reasons behind this concerning trend.
The implications of a substantial increase in government debt could have far-reaching effects on the country’s financial stability and economic growth. It is crucial for the government to consider strategies to curb debt growth and improve fiscal balance in the years ahead.