Brazil's Public Debt Soars to R$8.635 Trillion in 2025, Driven by High Interest Costs and Deficit Financing

Brazil's public debt reached R$8.635 trillion by the end of 2025, marking an 18% increase compared to the R$7.316 trillion recorded in 2024, according to official data from the National Treasury. This sharp rise is primarily due to the government's need to finance a persistent fiscal deficit and the heavy burden of debt servicing costs amid elevated interest rates.

The average Selic rate last year was 14.33%, resulting in an average cost of debt around 12%, with nearly half of the public debt tied to this benchmark rate. This dynamic significantly escalates the fiscal challenge faced by Brazil. For the first time, the country paid over R$1 trillion in interest in 2025, equivalent to 7.9% of GDP, highlighting how debt servicing is consuming a growing share of national resources.

The total Gross General Government Debt (DBGG), which includes debts of federal, state, and municipal governments, also rose, slightly increasing from R$10.018 trillion to R$10.080 trillion, maintaining a stable ratio of 78.7% of GDP. The Federal Public Debt (DPF) stock remained within the Annual Financing Plan projections, estimated between R$8.5 trillion and R$8.8 trillion.

Looking ahead, Treasury forecasts for 2026 indicate Brazil's public debt could reach between R$9.7 trillion and R$10.3 trillion, with the DPF potentially climbing to 83.6% of GDP. The country now holds the highest debt level among emerging economies, posing significant challenges for fiscal and monetary policy.

These figures underscore the pressing need for Brazil to address its structural fiscal imbalances, as the sustained high cost of debt undermines economic growth prospects. The substantial interest expenditures constrain room for other government investments and reforms, making debt management a top priority for policymakers in the coming years.