Moody’s: breach of spending cap rule is a material risk

The Brazilian government’s spending cap rule faces a “material risk” of being breached from next year onward due to rising political risk and pressure to maintain welfare spending, ratings agency Moody’s said. Breaching the spending cap would push government debt even higher and threaten Brazil’s credit profile. Moody’s expects government spending to drop to about 39% of GDP in 2021 from 42% this year, which will support the fiscal accounts, although this would still be higher than the 38% of GDP pre-pandemic last year.

Source: Reuters