CNC defends administrative reform to curb public debt

The National Confederation of Commerce in Goods, Services and Tourism (CNC) released this Tuesday (1st) a study on the impacts of the “uncontrolled growth of public debt”. According to the entity, without structural reforms, such as administrative reforms, the accumulated loss could exceed R$1.375 trillion, compromising the sustainability of businesses in the country.

The study points out that, for every 1% increase in public debt in relation to GDP, Brazil loses around R$1.3 billion annually, which directly affects the investment capacity of the private sector, increases credit costs and reduces the country’s competitiveness. The CNC warns that, without a quick solution, the economic scenario could worsen, with severe consequences for the production sector.

The CNC highlights administrative reform as an essential measure to avoid an economic collapse. José Roberto Tadros, president of the entity, stated that the reform is not just a question of efficiency, but of the survival of the Brazilian business sector. The accelerated growth in public spending, combined with a modest increase in revenues, has fueled consecutive fiscal deficits, putting pressure on the government to increase debt.

Over the last 20 years, public spending has grown at an average of 53% per year, while revenues have increased by just 35%. This disparity has led to greater dependence on debt and imposed an increase in the tax burden, currently equivalent to almost 33% of GDP — one of the highest in the world, which directly harms the competitiveness of companies.

Consequences of debt

Without structural reforms, the study predicts that public debt could reach 100% of GDP by 2033, limiting investments in strategic areas such as infrastructure, health and education, essential for companies’ competitiveness. Furthermore, an increase of up to 9% of GDP in the tax burden would be necessary to balance public accounts, according to the study.

Felipe Tavares, chief economist at CNC, warns that the continuous increase in debt generates a vicious circle, increasing the cost of financing and preventing public investments that could boost the private sector. For companies, this scenario translates into higher credit costs, reduced investments and loss of global competitiveness.

Administrative reform and its impacts

The CNC estimates that implementing the administrative reform could generate savings of R$330 billion in 10 years. This reform, combined with privatizations and concessions, would attract new investments, relieving pressure on public accounts and the productive sector. Without these measures, the CNC predicts that every 10% increase in public debt would result in a 0.12% drop in annual economic growth.

Furthermore, the study highlights the need to correct the allocation of public spending, especially in education. Brazil, according to the CNC, invests more per student in higher education than in primary education, which negatively affects the country’s performance in international assessments.

In response to the seriousness of the scenario, the CNC launched a manifesto and a national campaign, broadcast on open TV and social networks, highlighting the urgency of reducing public debt as an essential condition for the country’s sustainable development. Without this change, the business community will be the most harmed, facing high economic risks, investment retraction and investor flight.

“The business community will be the most harmed if there is no immediate solution to the fiscal issue”, concluded Tadros, reinforcing the call for structural reforms to be adopted quickly.