Brazilian public debt grows from interest accrual, not social spending

Evidence

In June 2023 the Brazilian Central Bank set interest rates at 13.75 percent, and the wealthy private holders of governmental debt, just 10 percent of society, reaped all the advantages. National and international creditors gained around 700 billion reals (over 1 billion US dollars, equivalent to 7 percent of Brazil’s GDP) in one year. The Brazilian state did not incur debt to build schools or fund its social programs. Nevertheless, public debt increased: 82 percent of it resulted from accumulated interest. — Clara E. Mattei, Escape from Capitalism, 342

Categorization

• XREF: Direct negative evidence against the common claim that public debt reflects profligate social spending — a fact useful to rebut fiscal-responsibility discourse. — connects to: Most Brazilian public debt growth comes from accumulated interest — Clara E. Mattei, Escape from Capitalism, 342
• SEED: Seed for an explainer essay: how central bank rate policy transfers wealth to the top 10 percent without any new public spending.