Record Revenue Fails to Curb Brazil’s Towering Deficit
In the last 12 months, Brazil’s primary deficit, excluding interest payments, rose to R$280.2 billion ($51 billion).
This is the highest since July 2021, when it reached R$305.5 billion ($55 billion). On June 28, 2024, the Central Bank released its fiscal statistics report, highlighting the nation’s financial situation.
Finance Minister Fernando Haddad criticized the 2022 surpluses recorded under former President Jair Bolsonaro, calling them deceptive. He stated on June 26, 2024, that past financial mismanagement was often overlooked.
The consolidated public sector, including federal, state, and local governments, along with state-owned enterprises, posted a primary deficit of R$1.062 trillion ($191 billion) over the 12 months ending in May.
This is the highest negative balance since the historical series began in 2002.
Despite record revenue of R$203 billion ($36.51 billion) in May, the deficit increased under President Luiz Inácio Lula da Silva’s administration.
The nominal deficit, including interest payments, reached R$1.061 trillion ($190.75 billion), equivalent to 9.57% of GDP. In April, the negative balance was R$1.043 trillion ($187.59 billion).
Debt interest payments significantly contributed to the rise, totaling R$781.6 billion ($140.56 billion) over the 12 months ending in May.
This is the highest figure in the historical series. High base interest rates, like the Selic, currently at 10.5% per annum, partially explain this substantial interest payment.
In May, Brazil recorded a nominal deficit of R$138.3 billion ($24.88 billion), the highest for the month since 2020.
Record Revenue Fails to Curb Brazil’s Deficit
The consolidated public sector spent R$74.4 billion ($13.38 billion) on interest payments in May.
The primary deficit for the month, excluding debt interest, was R$63.9 billion ($11.50 billion), also the highest since 2020.
The historical peak for the nominal deficit, adjusted for inflation, was in October 2020, reaching R$1.299 trillion ($233.09 billion) over 12 months.
The record for the primary deficit, excluding public debt, was in December 2020, at R$887.5 billion ($159.64 billion) over the same period.
These figures indicate significant fiscal challenges for Brazil. The increasing deficit, despite rising revenues, suggests structural issues in managing public finances.
High-interest payments, driven by elevated base rates, strain the budget, reducing funds available for essential services and investments.
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