English 
Spanish 
4 min read
5 comments
The Brazilian economy is going through a critical moment, with uncontrolled public spending and extremely high interest rates putting pressure on the debt. According to Bruno Perini, structural reforms are the key to overcoming the current situation. Will Brazil be able to overcome this challenge and avoid a bigger crisis?
Is the Brazilian economy on the brink of an abyss or just going through temporary turbulence?
The answer to this intriguing question seems far from unanimous, but a recent analysis conducted by Bruno Perini, a renowned financial educator and influencer, brought to light numbers and reflections that are generating debate.
The discussion took place during his participation in the Dias Brothers Podcast, where he addressed fiscal and monetary issues that directly impact the country's future.
- After earning $175 million from the sale of PayPal in 1998, Elon Musk returns to the financial market with X Money
- Important highway (BR) must leave government hands and end up in private hands
- China's Richest Man: How Zhong Shanshan Dropped Out of School, Built a Billion-Dollar Empire and Lost $4 Billion in One Day
- Russian general warns British missile strike could trigger World War III: UK targeted for devastating retaliation
At the center of the analysis, Perini highlighted that, Despite successive tax collection records, Brazil faces a fiscal deficit that already exceeds the impressive mark of one trillion reais.
This scenario of uncontrolled public spending, combined with growing debt and the impact of the Selic rate, has been eroding the country's financial health and leaving economists and investors apprehensive.
The contradiction between revenue records and fiscal deficit
According to Perini, Brazil is experiencing an economic paradox: while government revenues break consecutive records, spending continues at an even faster pace.
As a result, the country's public debt continues to grow. He compared the situation to a “Formula 1 race,” where the country accumulates fast laps in terms of revenue, but is unable to achieve fiscal balance.
This imbalance is reflected in the interest on public debt, which already consumes around 800 billion reais per year.
To make matters worse, the economic history of Brazil – with accumulated inflation of 13 trillion between 1980 and 1994 – fuels investors' distrust of fixed-rate debt securities, further increasing the cost of public financing.
Selic as the protagonist of the cost of debt
According to Perini, the Selic rate, currently at 11,25%, is another factor putting pressure on public accounts.
During the podcast, he explained that Brazil's dependence on Selic-linked bonds makes debt servicing extremely onerous.
“In the United States, most of the public debt is issued in long-term, low-rate fixed-income securities,” Perini explained.
In Brazil, on the other hand, the constant fluctuations in the Selic rate make predictability difficult and increase the cost of debt in times of high interest rates.
Inflation and social impact
Perini highlighted that, although the increase in the Selic rate is a necessary tool to contain inflation, it has significant side effects, especially on the poorest.
“Inflation erodes families’ purchasing power, and it is the poorest who suffer the most, as they spend practically everything on essential consumer goods,” he highlighted.
For him, the rise in interest rates also directly affects the business sector.
Large retail chains such as Magazine Luiza and Casas Bahia, which incurred debts during the period when the Selic rate was at 2%, are now facing serious financial difficulties due to increased financing costs.
The fiscal dilemma and the limitations of adjustment
During the interview, Perini pointed out the obstacles to the adoption of more austere fiscal policies.
“Cutting spending is very difficult because the Brazilian budget is constrained by legal constraints and previous increases,” he explained.
He also mentioned the Laffer Curve, which demonstrates how excessively high tax rates can discourage economic activity and reduce revenue.
In his view, Brazil runs the risk of entering a scenario of “fiscal dominance”, where the precariousness of public accounts weakens the Central Bank's ability to implement effective monetary policies.
Brazil's economic future
Despite the grim diagnosis, Perini believes that the Brazil is able to overcome its economic challenges, as long as there is political will and discipline in implementing structural reforms.
He highlighted that “Brazil has faced serious problems in the past, such as hyperinflation, and emerged victorious.”
However, implementing significant reforms will require sacrifices and face political resistance.
Without them, the country may remain trapped in a cycle of high deficits, high interest rates and negative social impacts.
Bruno Perini's analysis not only highlights Brazil's fiscal difficulties, but also reinforces the importance of decisive action to ensure a more stable and inclusive economic future.
Is Brazil prepared for the challenges of structural reform?
This news is fake, journalism is increasingly discredited with so many lies, the country has controlled inflation, low unemployment, and high economic growth!!
I agree with you. Fake news ends up creating panic in weak minds, like ****.
As long as you exist, Brazil will never get out of this hole. Are you journalists sucking up to your boss? That's right...