Brazil Reports Improved Primary Deficit of R$30 Billion in February 2026 Amid Increased Public Investments

In February 2026, Brazil's Central Government reported a primary deficit of R$30.046 billion, marking an improvement from the R$31.598 billion deficit recorded in February 2025. This result exceeded market expectations, which had forecast a deficit of R$34.3 billion according to the Ministry of Finance's Prisma Fiscal survey. The primary deficit signifies that government expenditures excluding interest payments on public debt surpassed revenues during the month.

Total revenues reached R$157.8 billion, reflecting a 5.6% rise above inflation, driven primarily by increased tax receipts from the Financial Operations Tax (IOF) and Social Security contributions linked to a higher formal employment rate. However, revenues were insufficient to cover total expenditures, which amounted to R$187.7 billion and grew 3.1% above inflation. Higher spending was largely due to expanded public policies, salary adjustments, and increases in beneficiary numbers, with notable rises in education (R$3.4 billion), health (R$1.4 billion), personnel (R$2.2 billion), and social security (R$1.7 billion).

Investments in public works and equipment significantly increased by 49.7% compared to the previous year, totaling R$9.527 billion over January and February. This surge aligns with the government's broader fiscal strategy aiming for a primary surplus of 0.25% of GDP in 2026, approximately R$34.3 billion, tolerating a margin of 0.25 percentage points. For the year to date, the Central Government maintains a primary surplus of R$56.85 billion, buoyed by a strong surplus in January.

This fiscal data underscores the Brazilian government's balanced approach of managing expenditures to reduce the deficit while boosting investments in public infrastructure and social programs, reflecting key components of its financial strategy for 2026.