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Brazil's budget and energy

image credit: Rafael Herzberg
Rafael Herzberg's picture
Consultant energy affairs Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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  • Mar 30, 2021
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Brazil's budget and energy

The budget approved by the country for 2021 was severely criticized by economic analysts for including the use of funds that are mandatory (education, health) for other purposes such as projects for parliamentarians and for breaking the official limits of fiscal responsibility.

The question is relevant because the budget as it is has worrying consequences: instability (rising inflation, rising public debt costs and systemic imbalance in public accounts) and unpredictability (breach of contracts/laws, instability and institutional fragility).

The result of this situation is well known: increased inflation, super high unemployment, anemic GDP and to aggravate the exchange rate by further devaluing the Real (vis-à-vis the hard currencies) with all the associated consequences.

In this context, the energy/power sector presents itself with important challenges as it is a capital-intensive sector. To thrive it requires stability, which is the opposite of what is expected.

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