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Temer warns Brazil's debt could equal GDP

Staff Writer | November 22, 2016
Brazilian President Michel Temer warned that the national debt could swell to the size of the country'sGDP within eight years.
Brazilian President Michel Temer
LatAm   Governments in Brazil have spent more than they earned
Speaking to an advisory council of business leaders, Temer vowed to send a proposal to Congress next month to reform the pension system once lawmakers pass a spending cap.

He asked the council to back the cap to revive confidence in the economy.

A 20-year-long ceiling on federal spending cap should pass Congress without changes in a few weeks, he added. The measure has cleared the lower house and is expected to win approval by the Senate by Dec. 13.

"The nature of Brazil's crisis is fiscal. For too long, governments have spent more than they earned," said Temer, who replaced leftist Dilma Rousseff, who was impeached and ousted earlier this year from breaching budgetary laws.

In consolidated terms, the budget deficit is expected to close 2016 at around 10 percent of GDP for a second year, and the public sector debt currently stands at 71 percent of GDP.

It is expected to balloon to about 80 percent of GDP in a few years and could exceed 100 percent of GDP if spending is not curbed, Finance Minister Henrique Meirelles told the council.