Guilherme Benchimol, founder and executive chairman of XP Inc., stressed that foreign investors need confidence in Brazil's sustained fiscal health. Speaking at the XP Asset Annual Meeting 2025 in São Paulo, Benchimol acknowledged that the Brazilian stock market is currently undervalued. However, he emphasized that international investors seek guarantees that fiscal issues will not negatively impact the exchange rate, ensuring the country is on a "very sustainable cruise flight." If these conditions are met, he believes substantial foreign capital will flow into Brazil.
Benchimol urged the country to address its fiscal responsibilities, manage public accounts effectively, and attract more investments. He warned that a lack of inflation control would disproportionately affect the poor, leading to a rising exchange rate, increased Selic rates, monetary tightening, and a perpetual "rat race." He argued that the government should focus on core responsibilities like health, security, and education, leaving other sectors to the more competitive private entrepreneurs.
The broader sentiment regarding Brazil's fiscal situation remains a concern for experts. Mansueto Almeida, former Treasury Secretary, estimates Brazil's public debt will reach about 81% of GDP by the end of 2026, 10 percentage points higher than at the start of the current presidential term. He noted that while equity investors aren't deterred by electoral scenarios, they seek signs of budgetary responsibility from future governments. Similarly, ARX highlighted that stabilizing public debt, which is nearing 85% of GDP, would require a primary surplus of about four percentage points, roughly $500 billion, implying that current adjustments are insufficient and a major fiscal reform, potentially a PEC, is needed.
