ABSTRACT
This paper presents an analysis of the present public-sector financial crisis in Brazil and the possible pathways to fiscal adjustment. It points out some important issues involved in the design and implementation of the fiscal adjustment in the country which deserve further research effort. The paper contains five sections. The first covers the origins of the financial crisis that has been faced by the public sector. The role of the fiscal adjustment in both macroeconomic stabilization and growth resumption is analyzed in the second section. The third looks into the political economy of the fiscal adjustment, raising some issues which helps to understand the difficulties which have been hampering an adjustment of the magnitude that is required. In the fourth section distinct pathways to the fiscal adjustment are explored, with emphasis on alternatives to the simple increase in the tax burden. The last section presents some final comments.
KEYWORDS:
Fiscal adjustment; public debt; public finance