According to Cristiano Romero, from Valor Econômico, Temer’s administration has managed to come up with a solution for keeping the public debt under control, even in the face of a difficult election year. Although his government hasn’t been successful in approving the Social Security reform bill, the Ministry of Finance was able to keep things at an acceptable pace as the new retirement rules is still left to be passed by the Congress.
The strategy, hailed as a relief for the Brazilian National Treasury, has to do with cuts in subsidized financing. Brazilian Development Bank (BNDES), in 2015 alone, took more than R$ 500 billion from the public budget for financing big corporations, especially the auto industry. Temer’s administration decided to expedite BNDES’s payments by progressively increasing the amount of each installment and by also reducing their deadlines.
Other important factors, such as the reduced inflation rate, as well as cuts in SELIC (Special System for Settlement and Custody) taxation have contributed to that overall economic relief. Consequently, a lot of pressure has been taken out of the public debt, which turned out to be less than 80% of 2017’s GDP.