Your card has been cloned and you will pay the bill

Currently, few people can say that they have never had the unpleasant experience of having their card cloned. It is not uncommon that, on these occasions, the crime is only discovered after the verification that the card bill is filled with exorbitant expenses not incurred by its holder. The experience is frightening and - at times - is the foreshadowing of a complex procedure to contest undue purchases from the bank, so that there is no need to pay the amounts used. On the other hand, in most cases the situation is resolved and, once it is proven that the expenses were made in a criminal manner, the holder is not obliged to pay them.

The comparison may seem absurd at first, but the fact is that in general terms, this is exactly what has happened with the State's expenses in Brazil. It is no longer today that the successive Brazilian governments have inadvertently spent and transferred the account with interest and monetary correction to society.

According to the report of the IMF (International Monetary Fund) fiscal monitor released on October 14, the ratio between gross debt and Brazilian GDP should jump 11.9 percentage points between 2019 and 2020, from 89.5% to 101.4%, that is, the second highest among emerging countries - behind Angola only.

According to the same report, and based on a slightly larger horizon, the IMF projections indicate that the debt-to-GDP ratio will grow annually, reaching a staggering 104.4% in 2025. Only then will the debt of the country will start to fall, if everything continues to go well and within the institutional normality.

What appears to be a pessimistic short-term forecast for the period from 2020-2025, but relatively optimistic from 2025 onwards, does not seem to take into account the country's taste for institutional crises and excessive spending in election years.

It is unlikely that the country will walk without political, economic and social crises until the year 2025 and, given the political unpredictability and the prospect of increased spending if an interventionist government wins in the polls, what can be expected is that the debt-to-GDP ratio does not decrease anytime soon.

Another point that the report does not mention, but which is very important to note, is the fact that there is an inflection point and no return, when this debt / GDP ratio becomes unsustainable and a possible default becomes, at best, a way out - if not acceptable - at least possible.

At this tipping point, which is not known for sure, the insecurity caused by the imbalance in the accounts will alienate investors and could affect debt interest rates. It is not difficult to conclude that in a situation like this the problem will become a snowball and that there will be no other response from the State, if it does not increase taxes (direct or indirect) or carry out some type of confiscation. Whether ostentatiously or more subtly, the bill for this debt will be passed on to everyone without distinction. This will result in the loss of purchasing power, a decrease in the quality of life and the precariousness of existing structures.

The most appropriate institutional path would be to be able to approve important structural reforms (such as the administrative one), carry out expenditure restraint and continue to move forward with a bold privatization plan that discourages the State. However, it is unlikely that the reforms - after going through all the legislative deformation - will be sufficient to prevent the unwanted bill from being passed on to taxpayers.

The horizon does not look promising and, every day, it seems that contesting the undue expenses, which contribute to the increase in debt, is even further away from being possible. In this chaotic scenario there is very little to be done institutionally, but options until then considered unorthodox, such as, for example, cryptocurrencies (which are outside the control of the State), seem to be a viable option to avoid - individually - payment the bitter bill of political and economic irresponsibility.