The IMF forecasts that Brazil's gross public debt will rise to 92% of GDP by 2021 due to fiscal deterioration and unbalanced accounts, raising concerns over economic collapse. The current high allocation of budget resources towards debt interest and amortization is deemed unsustainable, threatening investments in social and economic infrastructure. Urgent measures such as debt audit and renegotiation are essential to prevent further economic vulnerability and mitigate the adverse effects on the population and social welfare.

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PUBLIC DEBT MAY LEAD BRAZIL TO ECONOMIC COLLAPSE
Fernando Alcoforado *
The IMF (International Monetary Fund) forecasts that, in Brazil, gross debt evolves
from 73.7% of GDP in 2015 to 92% of GDP in 2021. The IMF sees this as effect of the
fiscal deterioration in Brazil. The IMF forecasts that the Brazilian public sector will
continue with its unbalanced accounts by 2019, to only in 2020 return to record primary
surplus that is economy to pay debt interest. In the document, the IMF says that the
large fiscal deterioration in Brazil in 2015 and 2016 results from a strong economic
downturn environment, political turmoil and poor performance of government revenues
(See the website <http://www1.folha.uol.com .ca / market / 2016/04/1760532-imf-
predicts-deficit-to-Brazil-until-2019-and-debt-gross-to-92-of-gdp-in-2021.shtml>).
The IMF questions the fact that the Brazilian government spends more than it collects
accumulating debts that are among the largest of the emerging world. The public debt of
Brazil increased from R$ 62 billion at the beginning of the Cardoso government in 1995
to R$ 687 billion at the beginning of the Lula government, to R$ 1.6 trillion at the
beginning of Dilma Rousseff government in 2009 and R$ 3.3 trillion in 2016 at the end
of Dilma Rousseff government. The analysis of these figures for the Brazilian public
debt allows finds its increasing deterioration over time. This has contributed to the
payment of interest and amortization of public debt corresponds to about 45% of the
Brazilian government budget. Maintaining the policy of allocating more resources to the
payment of interest and amortization of debt, there will be fewer resources available by
the government (federal, state and local) to invest in economic and social infrastructure
and transfer to social security, states and municipalities all in bankruptcy situation.
If there is no reversal of the trend in the public debt and payment policy of interest and
amortization, the imbalance between demand and availability of resources to meet the
needs of Brazil in economic and social infrastructure and transfer to social security,
states and municipalities will increase with the passage of time at the expense of the
population and the national productive sector. For the Brazilian government have the
resources for investment in economic and social infrastructure, it will have to
renegotiate with domestic and foreign banks (55% of creditors of public debt),
investment funds (21% of creditors of public debt), pension funds (16% of creditors of
public debt) and non-financial companies (8% of creditors of public debt) the reduction
in spending on the payment of debt service prolonging the payment of interest and
amortization of public debt.
Besides the internal public debt, there is also noted a massive foreign debt. Even with
the economy in stagflation (stagnation with inflation), gross foreign debt of Brazil is
growing. From US$ 351.9 billion in 2010 to US$ 523.7 billion in June 2016, an amount
that exceeds US$ 379 billion of the country's reserves. The increase in the period was
48%, raising fears that many companies may be vulnerable in the event of a sharp rise
in the dollar rate due to events such as the rise in interest rates in the United States.
Today, according to Central Bank (BC), who takes more money abroad is the private
sector. Multinational intercompany loans, for example, increased 107% from 2010 to
June this year, from US$ 95 billion to US$ 197 billion. As interest rates for long-term
credit in Brazil are very high, averaging 12% per year, so it is natural for companies to
seek resources abroad, where the rate is 2% per year.

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It appears, therefore, that the allocation of most of the budgetary resources of the
Brazilian government (45%) for the payment of interest and amortization of public debt
is unsustainable in the medium and long term because Brazil would not have public
resources to invest in economic and social infrastructure and transfer resources to social
security and to the states and municipalities. In addition to the domestic public debt that
compromises the future of the country, the foreign debt in the amount of US$ 523.7
billion in June 2016 that exceeds US$ 379 billion of the country's reserves increases
further the economic vulnerability of Brazil. Taking into account the risk that Brazil
may face in the future with the "explosion" of domestic and external debt, it is urgent to
carry out an audit of the debt and its renegotiation in order to stretch it in time to reduce
the country's burden of payment service of these debts. Without the adoption of this
policy, the Brazilian government will have to make foresight social reform to the
detriment of the population and privatize public assets as is being advocated by the
government Michel Temer.
In addition to undermining the interests of the vast majority of the population favoring
the creditors of the public debt with the Selic (basic rate of the economy) interest rate
policy extremely high, the Michel Temer government tries to present as a solution to the
financial crisis of the Brazilian state to pension reform arguing that the shortfall of
foresight social is huge and its structure is not sustainable for the years to come. It is a
fallacy to justify the privatization of social security and care services, and allocate more
resources to the financial sector. The foresight social deficit is a lie made true by
performing accounting maneuvers that do not respect what the Federal Constitution
stipulates. Correct, constitutionally, it is to consider the discussion on "Social Security"
and not on "Foresight Social" in which the latter is part of it.
By Art. 194 of the Brazilian Constitution, social security comprises an integrated set of
actions initiated by the public authorities and society to ensure the rights to health,
foresight social and social assistance. The social security gets surpluses every year,
according to a survey by the National Association of Tax Auditors of the Federal
Revenue of Brazil (ANFIP). Data indicate that between 2008 and 2014, the surplus of
social security are beyond R$ 319 billion, distributed as follows: 2008, R$ 63,213
billion; 2010, R$ 53,828 billion; 2012, R$ 82,690 billion; 2013, R$ 76,214 billion; and
2014, R$ 53,892 billion. It is important to note that Foresight Social is part of Social
Security. Therefore, reducing the discussion only to Foresight Social is to want to hide
the surplus of Social Security. It is important to note that the Federal Constitution (Art.
195), social security is financed by all of society, directly and indirectly, under the law,
with funds from the government, businesses and workers.
To complete, the Michel Temer government announced the fiscal target for 2017 that
will have deficit of R$ 139 billion. For 2016, the deficit planned by the federal
government is R$ 170.5 billion. It seems a great effort to reduce the damage, but it is
still a disaster almost inevitable without a massive tax increase. The unfortunate is that
while the Brazilian government budget intended to allocate 45% for payment of interest
and amortization of public debt, education, health and work do not reach 4% each,
culture receives 0.04% of the budget, citizenship rights 0.03%. There aren´t over where
to draw the country's wealth and transfer to the financial sector but to reduce spending
on education, health and social security as recommended by the Michel Temer
government. All this set of measures will not solve the economic and financial crisis of
the government, and aggravate the economic crisis affecting the whole of Brazilian

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society whose solution will only come with the economic growth of the country. No
Temer government measures points in this direction.
The Brazilian people need to understand that the Michel Temer government does not
the audit of domestic and external debt of Brazil and does not propose to renegotiate the
payment of debt service because it is submissive to the national and international
financial capital, just as the FHC, Lula and Dilma Rousseff governments. The Brazilian
people need to understand that without the adoption of the measures proposed in this
article and in the article The future of Brazil post-impeachment of Dilma Rousseff that
we publish on the website <htpp: //fernando.alcoforado.zip.net>, Brazil will not
overcome the current crisis and will not retake its development. With our proposals,
would be avoided pension reform and the privatization of public assets that inevitably
will happen with the political forces under the leadership of Michel Temer in power.
* Fernando Alcoforado, member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and
consultant in strategic planning, business planning, regional planning and planning of energy systems, is
the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova
(Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São
Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado.
Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX
e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of
the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller
Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe
Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e
combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011),
Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012) and
Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV,
Curitiba, 2015).