Disentangling Policy and Politics: Non-Fiscal Implications of the Calculation of the PSBR in Brazil

Abstract

Controlling the public sector deficit is critically important for the formulation and implementation of macroeconomic policy in Brazil. At one level, the deficit2 has become a key variable for the assessment of the stance and effectiveness of economic policy by international organizations, foreign lenders and investors and domestic agents. At another level, it is often claimed that lower deficits are essential for intertemporal macroeconomic stability in the country. In this context, the public sector borrowing requirement (PSBR) has become increasingly relevant.