Thursday, February 11, 2016

Brazil Public debt forecast to reach 84% of GDP by 2018

Brazilian public-debt forecasts for the next few years are raising concern. The gross debt, which ended 2015 at 66.2% of GDP, could reach nearly 84% in 2018 according to Itaú projections. The level that excludes foreign reserves from the gross debt could also rise, going to 58% of GDP in 2018 from 42% last year. Itaú expects the public sector to continue posting primary deficits in the period, marked by very weak economic performance and high real interest rates.

valor.com.br 10fev16

There will be no surplus and the government knows it

Before defining how much of this year’s budget it will cut, the government will have to take a much more difficult decision. President Dilma Rousseff and her economic ministers will have to evaluate whether it is worth keeping the illusion that it’s possible to achieve the primary-surplus target of 0.5% of GDP. This is the first time in which the year begins with all private and government economists aware that the fiscal target is a mirage. The best option for the government may be showing full transparency to society on the gloomy situation of public accounts.