11/24/2023 0 Comments Debt clockThe Banco Nacional de Desenvolvimento Econômico e Social (BNDES) is one of the world’s largest state-owned development banks and it has become a great source of income for the government. The finance ministry of the federal government of Brazil is responsible for the national debt and answerable to the country’s parliament, which is based in Brazilia, the national capital.Ī division of the finance ministry, which is called Tesouro Nacional is directly responsible for raising debt on behalf of the government. This means that international investors looking to buy Latin American government securities are more likely to buy Mexican bonds than those issued by the government of Brazil. For example, Mexico has an A3 credit rating. These ratings are not good and do not compare well with Brazil’s rivals. The credit rating allocated to Brazil by the major agencies is shown in the table below. This consideration extends to all types of investments, but it is particularly cogent for those investing in government securities. Investors look to the credit rating of a country when they consider investing in it. These problems, together with the increasingly unstable political landscape, mean that the Brazilian government has to offer high interest rates in order to attract buyers to its securities. The financial scandal that has emerged about the manipulation of state-owned enterprises shows that Brazilian politicians have become adept at hiding government debt and using public assets for personal gain.Įmerging revelations about the manipulation of state government budgets are also scaring away international investors from Brazil. The debts and payments made by Petrobras have been the source of political turmoil in recent years, resulting in the conviction of one former president and the ongoing trial of another.
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