Economic Analysis - Pension Reform Set To Challenge Next Administration - AUG 2017

BMI View : Brazil's fiscal deficit will gradually narrow over the coming years, though debt levels will remain elevated. Critically, proposed pension reforms are unlikely to significantly alter the trajectory of mandatory spending, which will likely require the next administration to revisit the issue.

  • We maintain our expectation that Brazil's fiscal deficit will narrow over the coming years, as rebounding economic activity will support revenues while real expenditures are held constant.

  • Nonetheless, the sustainability of the country's fiscal trajectory depends on the enactment of pension reforms.

  • Gradual Improvement Despite Uncertainty
    Brazil - Budget Balance
    f = BMI forecast; Source: BCB, BMI

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