GRANDES QUESTÕES sobre a FISCAL, DÍVIDA E JUROS BRASILEIRO | Second Level #31

Summary

Bruno Funchal, CEO of Bradesco Asset Management and former National Treasury secretary, discusses Brazil's fiscal situation, debt trajectory, budget rigidity and the productivity agenda. He argues the fiscal debate has improved but remains urgent, that adjustment should come through spending and budget flexibility, and that high interest rates are a consequence of past deficits. On markets, he sees continued foreign inflows into Brazilian equities, a favorable cycle for multimercado and equity funds as rates fall, a still-positive but lower-return credit environment, and a passive rather than active approach to crypto.

• Brazil's fiscal situation is concerning but not a lost cause; debt is around 80% of GDP versus 60% for emerging peers.
• Funchal favors spending-based adjustment and a more flexible budget through the DDD agenda.
• He stresses a productivity agenda including education quality, technology and better public management.
• He says high interest rates are a consequence of past deficits, not the primary cause of the debt problem.
• Foreign inflows have driven Brazilian equities and could continue with a weak dollar and local underallocation.
• He is positive on Brazilian multimercado and equity funds as the monetary easing cycle approaches, and sees credit as still useful but with tighter spreads.
• Crypto is treated as a passive diversification product, with Bradesco launching Bradesco Bitcoin and exploring ETFs.
• Bradesco Asset is pursuing partnerships and alternatives such as private credit, infrastructure and real estate.