Brazil Posts $9.5 Billion Surplus as Revenue Climbs, Spending Falls

Brazil’s central government achieved a R$54.2 billion ($9.51 billion) primary surplus in the first two months of 2025, the Independent Fiscal Institution (IFI) reported on Thursday.

This figure more than doubles the R$21.2 billion ($3.72 billion) surplus recorded during the same period last year, marking a significant fiscal improvement. Primary revenues grew by 3% in real terms during January and February compared to 2024.

The federal government’s net revenue increased by 3.5% after deducting transfers to states and municipalities. Administered revenues jumped by 3.9% while social security contributions rose by 2.7%.

Primary expenditures simultaneously decreased by 5.1% in real terms. This reduction stems partly from the year starting without an approved budget. Additionally, the government avoided repeating last year’s large February payment of backed-up court-ordered settlements.

Several spending categories still showed growth despite overall expenditure decline. Social security benefits increased by 2.3%, unemployment payments rose by 4.4%, and the Continuous Cash Benefit program jumped by 13.5%. Meanwhile, personnel expenses fell by 2.8%.

The IFI projects net revenue will reach 18.3% of GDP by year-end, greatly supporting the government’s primary result target. However, spending containment measures approved last December haven’t yet shown noticeable effects on expense trajectories.

Brazil’s Fiscal Target for 2025

Brazil operates under a fiscal framework requiring a zero primary deficit for 2025. This target allows a 0.25% of GDP tolerance margin, approximately R$30.97 billion ($5.43 billion). Experts consider this goal achievable with proper management.

The IFI believes the government can meet its target with modest flexibility. Success requires implementing at least R$18.6 billion ($3.26 billion) in budget freezes and R$15.7 billion ($2.75 billion) in resource pooling by December. These fiscal management efforts remain crucial as Brazil balances growth initiatives with sustainable debt levels.

Public debt concerns persist despite positive short-term results. Brazil must continue strengthening fiscal discipline while addressing competing social and economic priorities. The government faces challenging decisions throughout 2025 to maintain this early positive momentum.

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