Brazil Faces Record Fiscal Deficit in 2025 Amid Urgent Calls for Economic Reforms

Brazil's public accounts for 2025 revealed a primary deficit of R$ 55.021 billion, equivalent to 0.43% of the GDP, marking an increase from the R$ 47.553 billion deficit (0.4% of GDP) in 2024, according to the Central Bank's data. The Government Central's primary deficit rose significantly to R$ 58.687 billion from R$ 45.364 billion in the previous year, largely driven by mandatory expenditures such as Social Security and the Continued Benefit Program. Despite record revenues topping R$ 64.3 billion with a 2.8% growth rate, the fiscal imbalance persisted. Regional governments exhibited a surplus of R$ 9.537 billion, improving over 2024's R$ 5.885 billion.

Interest expenses reached a historic high of R$ 1 trillion in 2025—up from R$ 950.423 billion in 2024—but these expenses as a share of GDP decreased from 8.07% to 7.91%. Total public debt soared to R$ 8.311 trillion, representing 65.3% of GDP, the highest ratio ever recorded, exacerbated by the nominal deficit and currency valuation changes. The gross public debt also increased to R$ 10.017 trillion or 78.7% of GDP from R$ 8.984 trillion previously.

Amid these fiscal challenges, economist Gesner Oliveira of Fundação Getulio Vargas highlighted the urgent need for economic reforms to unlock Brazil's stalled growth. Oliveira emphasized the importance of restructuring the public administration, which he described as disorganized and dysfunctional, to modernize the state. He advocates for a more efficient, rational tax system and stronger legal security to foster confidence and growth. Warning that the next president faces a daunting fiscal burden, Oliveira called for increased public awareness and consensus-building to implement necessary reforms.

This combination of record fiscal deficits and accumulating debt underscores Brazil's pressing need for comprehensive fiscal and administrative reforms to stabilize public finances and promote economic development moving forward.