“The government is by far the biggest debtor, generating a demand that pressures interest rates and creates a vicious cycle which needs to be stopped,” sums up former Central Bank president Armínio Fraga, currently a principal at Gávea Investimentos. “We are unable to create an efficient state, with resource allocations that justify to society the tax burden’s size,” says former Brazilian Development Bank (BNDES) president Elena Landau.

In order to improve the fiscal side, analysts underscore the importance of enacting measures to control spending, which include decoupling pensions and welfare benefits from the minimum wage, as well as enacting a new pension reform.

A productivity that grows too slowly, except with agribusiness, represents another problem. Between 1995 and 2024, labor efficiency gains rose on average just 0.8% a year, according to FGV Ibre researcher Fernando Veloso. Given the weak efficiency gains, the economy is unable to grow faster without creating inflationary pressure.

Fiscal uncertainties and low productivity are some of the topics discussed in this edition of Valor Econômico, which celebrates its 25-year anniversary with a 96-page special section. Among other challenges discussed are education problems, energy transition, and corporate efforts.