Brazil Debt Sustainability (Schwartsman)

Fiscal accounts in Brasil heve shown a considerable deterioration since the onset of the crisis. The public sector deficit, which reached a modest 1.8% of GDP, has already moved up to 3.2% of GDP. Indeed, investment (at least federal investment) remained relatively unchanged, while current outlays, chiefly payroll and pensions, increased significantly in the year. Summing, Brazilian fiscal policy is not growth-friendly. Current spending crowds out public and private investment, while the tax burden reduces significantly the incentives for private investment…by Alexandre Schwartsman (Santander)