Brazil Will Be More Aggressive With The Bond Markets As A Response To The Coronavirus Crisis
The more aggressive measures will be directed to the second half of 2020
This decision was firstly elaborated in order to cover the expenses for the governmental responses to the financial and economical crisis against the coronavirus pandemic. On Wednesday this Week, the Treasury Secretary, Mansueto Almeida, stated that those measures are not like the early 2000’s economical decisions related to the downturns of that time. Many economists are completely worried because this is clearly an all-time low in the economy, but not only to Brazil, also for many Countries in the World.
Short-term spending will be driven by this increase in financing
It also means more privatizations on the Horizon, the taxes would only be increased in the worst case scenario. Some are talking about a kind of a Marshall Plan in Brazil to promote GDP growth after the covid-19 pandemic. But there are also specialists that talk about the Economy in Brazil not having the same fiscal space to do this kind of thing. This means that what they are actually expecting is that the economical situation won’t change at all, for the worst, in the first place.
The privatization of Petrobras will also be delayed to 2021
The decision was taken by the Brazilian Government because of the Pandemic. The boost of spending is to protect the economy by making up for a shortfall in revenues taxes, but this is also being considered temporarily. They declared now that the expenditures will be completely directed towards the Health Care System and also to help the families with lower income rates during the quarantine that affects the business in the whole Country right now.
Expenditures must be restricted to this fiscal year
This, of course, is due to the fact that we might be facing a temporary crisis but also because Brazil has resources to hold the Economy during this period of extreme need by those sectors. Also it has to be temporary for the sake of our economic stability, our fiscal debt this year could reach to 600 billion Reais making the national debt account for it would be unsustainable to maintain this rate of expenditure for more time.
We certainly have learned from the past
Brazil has gone through a number of economical difficulties in the past and somehow we have learned how to deal with it. But in this time, the government has not higher expectations for purchasing public or private bonds since the crisis is unprecedented. Our world has turned upside-down from one day to another because of the coronavirus. Now we will have to deal with a new reality and different ways of making money.
In this article we have looked at decisions made by the Brazilian Government to stop a possible economic crisis caused by the covid-19 pandemic. Did you like the information we shared? Don’t forget to follow us and share this awesome article with all you friends on Social Media.