Brazil’s Interest Bill Is Eating the Budget — and Could Stay Near 8% of GDP
Key Points
- Brazil is on pace to spend about 8% of GDP on interest in 2025.
- A 15% policy rate and fast-repricing debt keep the nominal deficit wide even if the primary gap is small.
- Debt is projected to keep rising into 2026 unless borrowing costs fall and fiscal rules regain credibility.
Brazil may end 2025 with the world’s heaviest interest burden relative to the size of its economy, a reminder that the fiscal fight is increasingly about the price of financing the state.
An analysis highlighted by Valor Econômico, drawing on the IMF’s Public Finances in Modern History database, puts Brazil at the top in 2024, with interest spending estimated at 8.28% of GDP.
In a comparison of 153 countries, the next-highest readings cited were Sri Lanka (7.81%), Pakistan (7.76%) and Bahrain (6.54%). Among large emerging markets, the same set lists Mexico at 6.48%, South Africa at 5.26% and India at 5.11%.
Domestic numbers show why the label sticks. In the 12 months through October 2025, net interest expenses reached R$987.2 billion ($183 billion), equivalent to 7.88% of GDP.
Brazil’s rising debt and interest burden shape investment climate
For full-year 2025, expectations are that the total surpasses R$1 trillion ($185 billion), keeping the headline close to 8% of GDP. The mechanics are straightforward and unforgiving.
With the Selic at 15% a year, a sizeable debt stock, and a structure that transmits high rates quickly into servicing costs, interest absorbs a large share of revenues.
Repeated fiscal carve-outs and one-off fixes can widen the risk premium and dull the impact of future rate cuts. The Senate’s Independent Fiscal Institution projects a 2025 nominal deficit of about 8.5% of GDP, combining interest near 8% and a primary deficit around 0.5%.
Debt is still climbing. IFI estimates gross debt rose from 71.7% of GDP at end-2022 and could reach 77.6% in 2025 and 82.4% in 2026. Even if rate cuts begin, relief may arrive slowly.
For readers abroad, the stakes are clear: high interest crowds out investment and keeps Brazil’s risk premium elevated. Brazil’s carry may still attract capital — but the interest bill is setting the terms.
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