Brazil’s financial woes, lessons for SA – The Wall Street Journal
DUBLIN — Like their South African counterparts, Brazilian politicians have a lot of big ideas. As Brazil heads into its elections this weekend, presidential candidates are promising voters all kinds of wonderful things – less corruption, better health systems, better education, and better infrastructure. Yet the reality is that Brazil can barely afford to keep the lights turned on. The Brazilian government is paying most of its bills with borrowed money, after years of overspending and borrowing. Despite high tax rates, Brazil has failed to balance its budget for years, and the cheque is coming due as global liquidity dries up. If it wants to avoid the fate of neighbouring Argentina, which has seen its currency slump and interest rates soar as foreign lenders have abandoned ship, Brazil has some serious budget cutting to do. All this may sound familiar. Like Brazil, South Africa has overspent for some years now and financed the gap by borrowing heavily. Although the South African budget is in better shape than the Brazilian equivalent, SA's politicians are going to have to walk a careful line if they want to avoid a currency or interest rate crisis. – Felicity Duncan
By Paulo Trevisani and Jeffrey T. LewisÂ
SÃO PAULO — Just days before Sunday's pivotal presidential election, Brazilian candidates are promising to crack down on spiraling violence, improve weak educational and health systems and shore up the country's crumbling infrastructure. But none of the leading candidates mention Brazil's biggest problem: There is no money to do any of that.
___STEADY_PAYWALL___