Brazil’s 2025 Fiscal Picture: A Small Primary Gap, A Huge Interest Bill

Key Points

1. Brazil’s public sector ran a primary deficit of R$55.021 billion ($10 billion) in 2025, near forecasts.
2. The central government stayed in the red, while states and cities partly offset it with a surplus.
3. The decisive pressure came from interest, lifting the overall shortfall to about R$1.0626 trillion ($197 billion).

Brazil closed 2025 with a primary deficit that looked modest on paper, but the broader fiscal reality remained heavy.

The consolidated public sector, which includes the federal government, states, municipalities, and most state-owned firms, posted a primary deficit of R$55.021 billion ($10 billion), or 0.43% of GDP.

That was slightly worse than 2024’s R$47.553 billion ($9 billion), and far better than 2023’s R$249.124 billion ($46 billion). The breakdown explains the tension.

The central government ran a primary deficit of R$58.687 billion ($11 billion), equivalent to 0.46% of GDP. States and municipalities delivered a combined surplus of R$9.537 billion ($2 billion), while state-owned companies showed a deficit of R$5.871 billion ($1 billion).

Brazil Public Sector Shows Mixed Surplus

Look closer and the regional picture was mixed, with states recording a surplus of R$5.453 billion ($1 billion) and municipalities a surplus of R$4.084 billion ($1 billion). Monthly numbers added a seasonal twist.

In December, the consolidated public sector posted a primary surplus of R$6.251 billion ($1 billion) after a deficit of R$14.420 billion ($3 billion) in November. The December surplus was smaller than the R$15.745 billion ($3 billion) registered a year earlier.

For December 2025, the central government posted a surplus of R$21.572 billion ($4 billion), states and municipalities ran a deficit of R$19.783 billion ($4 billion), and state-owned firms recorded a surplus of R$4.463 billion ($1 billion).

The bigger story, though, was interest. Reported nominal interest expenses reached about R$1.0076 trillion ($187 billion) in 2025, around 7.91% of GDP. With interest included, the nominal deficit rose to roughly R$1.0626 trillion ($197 billion), or 8.34% of GDP.

Two technical factors mattered for how the year looked. Foreign-exchange swap results swung to a gain of R$105.9 billion ($20 billion) in 2025 after a loss of R$115.9 billion ($21 billion) in 2024, easing the measured interest bill.

Meanwhile, gross government debt was reported around R$10 trillion ($1.85 trillion), near 78.7% of GDP. A final wrinkle is that different fiscal yardsticks can tell different stories.

The Treasury reported the central government’s full-year primary deficit at R$61.691 billion ($11 billion), but also reported exclusions of R$48.683 billion ($9 billion), including precatórios of R$41.149 billion ($8 billion).

Under the target-check metric, the deficit was R$13.008 billion ($2 billion), about 0.10% of GDP.

Related coverage: Brazil’s Morning Call | Brazil’s Job Creation Hits Its Weakest Year Since 2020 This is part of The Rio Times’ daily coverage of Brazil affairs and Latin American financial news.

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