Hopes for timely and effective COVID-19 vaccines raise expectations for 2021. Moreover, 2020 was not altogether a lost year for Brazil: additional public spending of 8.2% of GDP and billions in liquidity support from the Central Bank helped contain poverty and sustained the flow of credit and household consumption, cushioning the potentially abysmal drop in demand. But unlike other major economies, Brazil has limited fiscal space to continue battling the effects of the pandemic. The budget for 2021 was not approved threatening another “suspension” of the constitutional mandate to maintain the budget ceiling. With public expenditure close to half of GDP — including directed credit, public enterprises, and special funds — Congress will have to rearrange the composition of public spending to maintain the ceiling. Doubts about a constructive outcome have already led to difficulties by the Treasury in rolling over its debt, threatening the stability of inflation expectations and renewed volatility in asset prices. The promise of fiscal expansion in 2020 was adjustment in 2021. The ability of the government to tackle this challenge brings up several troubling questions as we begin 2021. We are privileged to have an outstanding panel to help us address and understand the issues encompassed in Brazil’s fiscal challenges.
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Paulo Vieira da Cunha, Partner, Verbank Consulting, LLC
David Beker, Chief Economist & Strategist, Brazil, Bank of America
Samar Maziad, Vice President, Senior Analyst, Moody’s
Felipe Pianetti, Director, Portfolio Manager/Analyst, Lazard Asset Management
Thiago Vidal, Manager, Political Analysis, Prospectiva Consultoria
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