Report warns that indebtedness ‘will exceed the historical peak reached after World War II (106% of GDP) as early as 2029’, when it is expected to reach 107% of GDP
The Congress of the Congress Budget Office (CBO) has designed that the country’s public debt will reach historical levels in the coming decades, reaching 156% of the In 2055, if current laws remain unchanged. The report warns that indebtedness “will exceed the historical peak reached after World War II (106% of GDP) as early as 2029”, when it is expected to reach 107% of GDP. According to the institution, annual deficits should remain high, reaching 7.3% of GDP in 2055, driven mainly by debt interest costs, which will jump from 3.2% to 5.4% of GDP in the period.
Increased interest rates and persistent primary deficits are primarily responsible for the unsustainable trajectory, the CBO highlights. Health programs (such as Medicare and Medicaid) and Social Security will account for more than 50% of non -financial expenses in 2055. The Medicare, for example, will consume 5.2% of GDP that year, compared to 3.1% in 2025. The welfare, in the face of the aging of the population, will have its department of 24% in 2034 if there are no renovations.
The average economic growth will fall from 2.5% per year (1995-2024) to 1.6% (2025-2055), due to the decline of labor and productivity reduction. Without immigration, the population would start shrink in 2033, with elderly (65+) representing 23.4% of the total in 2055, compared to 17.9% in 2024. The CBO warns that high debt can “restrict public policy options” and increase vulnerability to tax crises.
*With information from Estadão Content
Posted by Sarah Paula
