Federal government investments reached their highest level for the first seven months of 2024 since 2016. However, economists consulted by Valor warn that these investments are still insufficient to significantly boost economic growth or ensure adequate infrastructure for the country. This responsibility largely falls to the private sector given Brazil’s fiscal constraints. Despite the recent increase, federal investment remains below the average of developed countries and continues to lack transparency.
From January to July this year, federal investments totaled R$32 billion, the highest level for this period since 2016, when disbursements reached R$36.8 billion. These figures, obtained by Valor from the official records of the National Treasury Secretariat (STN), are adjusted to July 2024 prices and exclude financial investments. Compared to the same period last year, there was a 31.8% increase.
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A third complicating factor is that Brazil’s starting point is higher than most emerging markets. According to the International Monetary Fund (IMF) in March, Brazil’s gross debt exceeds the average for emerging countries by more than 15 percentage points, trailing only Egypt, Ukraine, and China.
“Everyone is scrutinizing Brazil’s public debt closely,” said Margarida Gutierrez, a professor at the Federal University of Rio de Janeiro who likens the federal government to “constantly using an overdraft line of credit.”
Economists say the main way to create fiscal space for increased investments would be to change the rules for mandatory federal spending. Among the suggested options are unlinking social security and welfare benefits from minimum wage hikes, indexing the minimum wage only to inflation without real increases, and modifying constitutional spending floors for health and education, currently tied to revenue. From January to July, the total federal expenditure was R$1.325 trillion, but only R$32 billion was allocated to investment.
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