Analyzing public spending in Brazil

Brazil is undergoing an extremely sensitive economic moment. Public debt is rampant, investments are down, and the government doesn’t seem to be able to rationalize public spending. According to the Treasury Department, the public sector registered a BRL 13.5 billion primary deficit in June alone. Meaning that, even without taking into consideration the interest rates over the debt, the federal government’s revenues is not enough to pay for its expenses.

The next president will step into office already facing the possibility of not being able to meet the so-called “golden rule,” which stipulates that Brazil can only increase its debt to pay...