The Brazilian public finances have improved beyond measure following the various debt crises of the 1980s. But government debt remains high by regional standards, and could rise further, perhaps to as much as 85% of GDP, if mounting credit risks in private sector are ultimately transferred to the government’s balance sheet. However, while this would come as a nasty surprise to markets, the scope for comparatively rapid nominal GDP growth should ensure that, unlike in the developed world, Brazil’s public debt position remains sustainable.