The Brazilian fiscal scenario is in a “worrying” moment, according to former BC president (Central Bank) and economist, Armínio Fraga. According to Fraga, the Brazilian economy “has grown very well”, but that the growth “looks like being sustainable”.
The expert points out that investment levels remain modest, indicating possible structural weaknesses in the economy. He points out that the country’s debt is paying interest of approximately 10% above inflation in the short term, while government bonds maintain yields more than 7% above the IPCA.
Diagnosis and responsibilities
For Fraga, it is essential to make a “accurate diagnosis of the situation to establish effective treatments”. The former BC president explains that, at the moment, the government is borrowing money to pay interest, characterizing an insufficient primary deficit to cover interest expenses, resulting in exponential debt growth.
“Then he set modest goals that are not being met,” Fraga points out WW Especial. In addition, he states that some questionable accounting rules have been applied, which contributes to a “plot against fiscal stability.”
The relationship between debt and GDP continues to deteriorate ,. Fraga notes that growth already has signs of slowdown, a development that, according to him, should not surprise, considering the current context.
WW Especial
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