Brazil’s gross debt is expected to climb to 77.7% of GDP this year, an increase from last year’s 77.4%, with projections indicating a further rise to 80.2% by 2025.
These figures come from the Independent Fiscal Institution (IFI), a transparency organization linked to the Federal Senate.
This adjustment reflects a minor improvement in outlook compared to previous estimates, which predicted higher debt levels.
The anticipated increase is mainly due to slow nominal GDP growth and expected primary deficits from the central government.
The report also revises Brazil’s GDP growth forecast for this year to 1.2%, up from the 1% previously forecasted, which still falls short of the government’s optimistic 2.2% expectation.
The IFI points to differences in tax revenue estimations as a key reason for the discrepancy in projected primary deficits between its forecast and the government’s, with the IFI forecasting a 0.9% deficit of GDP in 2024 and 0.8% in 2025.
The probability of Brazil’s gross debt dropping below its December 2023 level of 74.3% of GDP by 2028 is now seen as 13.4%, a slight improvement from earlier predictions.
To stabilize the debt ratio at 74.3% in the medium term, a primary surplus of 1.5% of GDP is necessary, according to the IFI’s calculations.
This scenario underscores the significance of fiscal management and economic growth in addressing Brazil’s debt challenges.
The adjustments in debt projections reflect both the complexities of economic forecasting and the critical role of government policy in shaping the country’s financial future.
The collaboration between the IFI’s analytical perspective and government fiscal strategies is crucial for navigating Brazil’s path towards sustainable economic health.