The World Bank (WB) issued an important warning on Wednesday (10) when releasing a report on Brazil's public debt. The document points out that the gross debt of the general government, which includes states and municipalities, is expected to reach a worrying level in 2024: 87.8% of GDP, an increase of 10.5 percentage points compared to 2023.
This is a significant increase that demands attention. The WB attributes the increase in debt to a combination of three factors:
- Increased public spending during the Covid-19 pandemic: The Brazilian government has implemented several measures to mitigate the impacts of the pandemic, such as emergency aid and the Bolsa Família income transfer program;
- Slow growth of the Brazilian economy: The Brazilian economy has not yet fully recovered from the 2015-2016 recession, which limits the government's ability to generate revenue;
- Increase in international interest rates: The increase in international interest rates, such as the Selic rate, makes paying public debt more expensive.
Despite the increase in debt, the WB does not see major problems in Brazilian economic policy.
The report highlights that the government is taking measures to reduce the public deficit, such as pension reform and administrative reform. These measures are important to prevent the public debt from becoming unsustainable. Brazil, in fact, has a history of responsible fiscal management. The report cites as an example the Plano Real, which was implemented in 1994 and managed to stabilize the Brazilian economy.
However, the WB warns that the government needs to continue with fiscal adjustment measures to prevent public debt from becoming unsustainable. The report also highlights the importance of structural reforms to increase growth. economy Brazilian.
The WB concludes that Brazil has the potential to become a high-income country, but needs to implement reforms to improve the business environment and increase productivity.
Other measures that can be taken to reduce Brazil's public debt
- Increase the efficiency of public spending: The government can cut unnecessary spending and improve the management of public resources;
- Increase public revenue: The government can raise taxes or create new taxes;
- Renegotiate public debt: The government can renegotiate public debt with its creditors to reduce the cost of debt.
Reducing Brazil's public debt is important to ensure the sustainability of public accounts and the growth of the Brazilian economy.
Image: world-education.uol
