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Brazilian Debt Jitters

Brazil seems determined to test the limits of financial markets' tolerance for debt accumulation. It is not hard to come up with scenarios in which the country's debt burden reaches 125% of GDP or more by 2025.

LONDON – Two things have changed in fiscal policy worldwide in recent years. The first is that sustained low real interest rates have enabled governments to run larger deficits and carry larger debts. The second is that the coronavirus pandemic has made using this enlarged fiscal space imperative to bail out households and businesses and to stimulate economic recovery.

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