Economy

Economists criticize using spending cuts to contain public debt

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Based on a feed excerpt; full article content has not been acquired. Source evidence retrieved 29/10/2026, 12:24:24 UTC.

Briefings

Brazilian economists criticize the use of spending cuts to address public debt, arguing that high interest rates and the transfer of funds to financial elites are the primary drivers. While some economists like Simone Deos claim no risk of default due to domestic currency debt, others warn that reducing spending harms essential services. The debt-to-GDP ratio rose from 71.7% in 2022 to 82.9% in August 2026, with Brazil's interest payments accounting for nearly 9% of the GDP. Key figures include the 8.45% real interest rate and R$1.1 trillion spent on interest alone in the last 12 months.

Key points

• The public debt-to-GDP ratio in Brazil increased from 71.7% in 2022 to 82.9% in August 2026, driven primarily by high interest rates.
• Economists from the 'liberal' camp argue that spending cuts are the main solution, while 'heterodox' economists warn that such cuts harm essential public services like health and education.

Context

Brazil's public debt trajectory has alarmed 'liberal' economists who advocate for spending cuts as the primary fiscal solution. However, 'heterodox' economists argue that reducing spending damages critical services. The debt-to-GDP ratio rose from 71.7% in 2022 to 82.9% in August 2026, with Brazil's interest payments accounting for nearly 9% of the GDP. The debate centers on whether high interest rates or spending cuts are the main drivers of the debt growth.

Limitations

Evidence is limited to a single article from October 2026; specific data sources for the 2026 debt increase are not fully detailed. Some economists' views on the severity of the debt crisis remain unverified, and the distinction between domestic and foreign currency debt is not fully quantified in the provided text.

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