brazil protest Anadolu Agency/Getty Images

Brazil’s Argentina Moment

Last December, in a move to regain market confidence, Brazil’s National Congress adopted an unprecedented constitutional amendment that caps non-interest government expenditures for at least a decade. The move was born out of a real sense of fiscal urgency, but it carries significant long-term risks.

CAMBRIDGE – Brazil’s economy has been in free fall, a casualty of years of economic mismanagement and the vast corruption scandal that has engulfed the country’s political and business establishment – and which now threatens to bring down the second president in as many years. It may seem hard to focus on policy developments amid the political and economic turmoil, but the fact remains that Brazil must overcome fundamental challenges if it is to lay the groundwork for sustainable growth. Few loom as large as the country’s fiscal woes.