In July, the Brazilian government continued to incur debt. Lula’s government dues increased to 74.1% of its GDP, up 0.5% from June.
This means the liabilities increased from R$7.6 trillion (US$1.57 trillion) to R$7.7 trillion (US$1.59 trillion).
The Central Bank shared this information on August 31, 2023. This debt includes money owed by federal, INSS, state, and municipal governments.
Jair Bolsonaro, the president before Lula, finished his term with the smallest public debt in over five years.
At the end of 2022, Brazil’s total public debt was 73.5% of its economy, the lowest in five years, says the Central Bank of Brazil.
The latest increase happened because of interest, new debts, exchange rate changes, and GDP changes.
In July, the government’s net debt was 59.6% of GDP, or R$ 6.2 trillion (US$1.28 trillion).
Also, the public sector had a deficit of R$ 35.8 billion (US$7.38 billion) in July, compared to a surplus of R$ 20.4 billion (US$4.2 billion) in July 2022.
The deficit shows that the government spent more money than it earned before paying interest.
This might make borrowing more expensive in the future if investors ask for higher interest rates because of the higher risk.
This situation requires careful management by policymakers in the coming months.
DEFICIT
Brazil’s deficit increased a lot in July. The country had a deficit of R$35.9 billion (US$7 billion) in July, compared to a surplus of R$18.9 billion last year.
The National Treasury released a report showing a total deficit of R$78.2 billion (1.3% of GDP) between January and July 2023.
Over a year, the deficit was R$97 billion (0.95% of GDP). This information is crucial because it shows Brazil’s financial health, affecting economic decisions and policies.
In June, the federal government had its third-largest public deficit since 1997, with a deficit of R$45.22 billion (US$9.5 billion).