Brazilian State-Owned Enterprises Face Growing Losses and Privatization Debate
Brazil faces mounting losses in federal state-owned enterprises, prompting a heated debate over privatization versus restructuring.
- • Federal state-owned enterprises reported a R$ 8.9 billion deficit through August 2025, more than double the previous year.
- • Government subsidies to these enterprises increased to R$ 27 billion in 2025.
- • Correios posted a R$ 4 billion loss despite revenue growth, requesting a R$ 20 billion loan for stabilization.
- • Debate splits between restructuring to preserve public services and privatization due to operational issues and corruption concerns.
Key details
Brazil's federal state-owned enterprises have accumulated staggering losses of R$ 8.9 billion through August 2025, according to the Central Bank, more than doubling the deficit recorded by the same time last year. This financial strain has led to a significant increase in government subsidies, with federal transfers to these enterprises reaching R$ 27 billion in 2025, up by R$ 3 billion compared to 2024. The largest recipient was Ebserh, managing federal hospitals, which received approximately R$ 11.5 billion, followed by Embrapa, a key agricultural research institution. The Correios postal service starkly illustrates the challenges faced, posting a net loss of R$ 4 billion in the first half of 2025 despite revenue growth to R$ 8 billion, driven largely by soaring operational costs and administrative expenses.
This dire financial situation has sparked intense debate over the future of state enterprises. The Correios, in particular, recently requested a R$ 20 billion loan from public and private banks—guaranteed by the National Treasury—to stabilize its finances through 2026. Lawyer Vitor Marques advocates for restructuring the Correios, emphasizing the company's strategic importance, especially its extensive service reach to remote areas like Fernando de Noronha. Marques also highlighted inherited liabilities amounting to R$ 1.3 billion from the previous administration that further exacerbate the enterprise’s difficulties. In contrast, former senator and journalist Ana Amélia Lemos urges privatization as the only viable solution, pointing to persistent quality declines and recurring scandals involving fraud and corruption since 2005. She warns that the proposed loan would ultimately burden taxpayers amid an already substantial government fiscal deficit.
The government continues to grapple with how best to address the widening financial gap in public enterprises amidst competing views on privatization versus restructuring. The outcome of this debate will significantly influence Brazil’s economic landscape and public service delivery in the near future.