The piece examines Brazil’s External Financing Commission (COFIEX) and what its experience reveals about the balance between fiscal discipline and development needs in middle-income democracies. We show that COFIEX has been highly effective at keeping Brazil’s public external debt below 10% of GDP for most of the past two decades, thanks to its conservative fiscal filters and centralized oversight. At the same time, this success has constrained its developmental impact: institutional risk aversion and political incentives for visible infrastructure have limited investment in socially vital but politically “unrewarding” sectors such as sanitation. Yet COFIEX also plays an important strategic role through its partnerships with multilateral and bilateral development banks, whose technical expertise lowers project risk and can help crowd in private investment. More broadly, the Brazilian case highlights the growing tension facing many middle-income countries as they attempt to meet urgent infrastructure, climate, and social demands while staying within strict debt ceilings.
The article can be found here: https://onlinelibrary.wiley.com/doi/10.1111/1758-5899.70112
Benjamin Vidmar is a recent graduate of the Barcelona School of Economics and the Latin American Centre, University of Oxford, with research interests in development economics and political economy. He brings analytical experience from his early career at Google.
Felipe Krause is Lecturer in Latin American Studies at the University of Oxford, where he also coordinates the Brazilian Studies Program. A former Brazilian diplomat, his research focuses on the political economy of policy reform.
