Core Viewpoint - Brazil is facing a significant risk of fiscal crisis due to rising budget deficits, with former Finance Minister Maílson da Nóbrega warning that the country has "signed a contract for fiscal crisis" if structural reforms are not implemented promptly [1][2]. Fiscal Situation - Over 90% of Brazil's federal budget is locked into fixed expenditures, leaving less than 4% available for discretionary spending [1]. - If the rigid budget trend continues, there could be a "government shutdown-style fiscal collapse" by 2027 [1]. Structural Issues - The key reason for the budget imbalance is the mandatory spending obligations set by the 1988 Constitution, which restricts the government's ability to freeze or cut budgets [1]. - In comparison, most countries have about 50% of their fiscal space available for discretionary arrangements, with the U.S. reaching 70%, while Brazil's is only 4% [1]. Government Response - Recent discussions between Finance Minister Fernando Haddad and congressional leaders were disappointing, offering only "fragmented and shortsighted" suggestions without addressing fundamental issues [1][2]. - Nóbrega suggests that the government should quickly advance a new round of pension reforms and eliminate the linkage between minimum wage and retirement benefits [2]. Economic Outlook - Nóbrega emphasizes the need for Brazil to exit its current "fiscal convalescence" state and rebuild rational, sustainable budget rules to enhance market confidence and stimulate investment and productivity growth [2]. - Without improving total factor productivity, Brazil will struggle to return to a path of sustained growth and achieving wealth [2].
【环球财经】巴西前财长警告财政“崩溃边缘”
Xin Hua Cai Jing·2025-06-23 03:21