Economics
Brazil’s Exploding Debt-to-GDP Is Going to Become a Problem Soon
- Markets are expecting a rebound. That’s easier said than done.
- With debt-to-GDP at 67%, economic ‘dream team’ must act fast
Michel Temer.
Photographer: Jin Lee/BloombergThis article is for subscribers only.
Reining in Brazil’s mammoth budget is no small feat, no matter how good you are.
Cut discretionary spending, and risk blowback from an already frustrated electorate. Raise taxes, you could exacerbate the nation’s crushing recession. Privatize government companies? Beware the wrath of the unions. Shrink social security? It’ll take decades to manifest itself on the nation’s balance sheet. And that doesn’t even start to address Brazil’s massive interest tab.