Good morning! Today, finance institutions paint a bleak picture for Brazil’s debt scenario. The government could extend more loans to medium and small businesses. Mining firms reluctant to decommission dangerous dams.
Fiscal risks are real
After seeing its net public debt double as a percentage of the GDP between 2013 and 2020, Brazil has been able to enjoy some relief over the past year. But two separate reports from reputable institutions warn that the trend could see a quick reversal in 2022.
Abroad … The Institute of International Finance raised concerns about proposals to cut fuel prices through lower taxes and a price stabilization fund “that would be detrimental to Petrobras’ profitability.”
- Economists write: “The combination of recent changes to the spending cap and tax cuts could worsen the primary deficit drastically relative to a now impossible scenario of ‘full fiscal rectitude.'”
… and domestic. The Independent Fiscal Institution (IFI), a think tank operating under the Senate’s umbrella, issued a new report on the public debt. It claims that “the drop in the net public debt in 2021 was mainly driven by the nominal rise of the GDP,” among other factors.
- IFI expects the gross public debt to go...