Brazil Says 2025 Deficit Stayed Near Zero, But The Fine Print Matters

Key Points

1. Fernando Haddad says Brazil finished 2025 with a primary deficit of 0.1% of GDP, within the fiscal rule’s tolerance band.
2. With exemptions and court-driven obligations, he pegs the deficit near 0.17%—or about 0.48% including precatórios.
3. The fiscal pitch lands alongside cabinet speculation and a push to advance the EU–Mercosur deal.

On Tuesday, Brazil’s finance minister delivered a number meant to soothe: the federal government, he said, likely closed 2025 with a primary deficit of about 0.1% of GDP.

The National Treasury will publish the official result later this month, but the preview was aimed at one question—can Brasília keep its own spending rules? The answer depends on what “primary” measures.

It strips out interest payments and compares revenues with non-interest spending. Under the 2025 framework, the target was a zero primary result with a tolerance band of plus or minus 0.25 percentage points of GDP. Haddad noted the band’s cash equivalent: R$ 31 billion ($6 billion).

Then he laid out the asterisks. If you count items Congress excluded from the target and court-triggered costs—he referenced an INSS-related indemnity—the deficit would be closer to 0.17% of GDP, he said.

Add precatórios, the court-ordered payments that sit outside the compliance score but still hit the cash balance, and the deficit would be around 0.48% of GDP. That is where the tension lives.

For debt dynamics, labels matter less than money leaving the Treasury. Official projections place gross government debt around 79.3% of GDP in 2025 and still rising in subsequent years, with interest costs doing much of the work.

The timing also matters. Asked about when he might leave the Finance Ministry, Haddad said he would talk to President Luiz Inácio Lula da Silva, rekindling speculation about a campaign-season reshuffle.

He also pointed to the EU–Mercosur agreement as part of Brazil’s search for new export lanes: leaders are expected to sign in Paraguay on Saturday after the EU Council cleared signature steps, with European Parliament approval still ahead.

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