We’re covering today the worrisome prospects for Brazil’s public debt. The plan to give financial aid to state administrations. And the massive underreporting of coronavirus cases in Brazil.
What will happen to Brazil’s public debt?
The uncertainties created by the coronavirus crisis will affect the trajectory of Brazil’s GDP and its public debt for the next decade, says a report by the Independent Fiscal Institution (IFI) — a consultancy body attached to the Brazilian Senate. Before the coronavirus, the IFI expected the government’s level of indebtedness to remain stable, at around 80 percent of GDP until 2024, before decreasing. Now, the institution predicts a debt-to-GDP ratio of 100 to 138 percent, depending on the scenario.
- Tax revenue is set to fall BRL 151 billion (USD 29 billion) in 2020. Meanwhile, public spending will go up BRL 212 billion due to countercyclical measures.
Why it matters. Ballooning debt will make it harder for the government to foster investments in a post-pandemic world. Brazil has just come out of a lost economic decade — and could be heading into another.
How bad? The lasting effects of the coronavirus on the economy will depend on how well the country can contain the spread — how long...