Good morning! Today, the proposal to reorganize government debt repayments simply sweeps the problem under the rug. Jair Bolsonaro remained true to form in UN address. Brazilian coffee set for a rough 2022.
Solution for debt payments no solution at all
Congressional leaders met with Economy Minister Paulo Guedes on Tuesday to discuss a way to free up space in the federal budget — all while avoiding a default on the government’s court-ordered debt repayments.
The bomb to diffuse. In 2022, the government is beholden to pay BRL 89 billion (USD 16.9 billion) in IOU bonds known as precatórios. But to have enough money available to boost cash-transfer policies, the administration needs to avoid (or at least significantly reduce) the blow.
- No new solution was found, the trio formed by Mr. Guedes, House Speaker Arthur Lira, and Senate President Rodrigo Pacheco only revived a proposal floated by a member of the Federal Accounts Court — and endorsed by the National Council of Justice — to cap 2020’s payments at BRL 40 billion by way of a constitutional amendment.
Why it matters. While offering some immediate relief, the idea does nothing to reduce fiscal risks. Indeed, it only pushes the problem to 2023 — after...