🌀 Fiscal cliffhanger

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Why Brazil’s public debt worries more than other countries’

Brazil’s gross public debt reached 76.1% of GDP at the end of 2024, 2.2 percentage points more than the previous year, according to data from the Central Bank. The total debt reached BRL 8.9 trillion (USD 1.5 trillion).

State of play. The rise was largely driven by the incorporation of nominal interest payments, which jumped 7.5 points, and exchange rate fluctuations, which added another percentage point.

• Closely watched by credit rating agencies, the figure includes gross debt at the federal, state and municipal levels, as well as obligations tied to Brazil’s social security system (INSS).

• A steep depreciation of the Brazilian real in December, when the currency briefly weakened past six to the dollar, prompted the Central Bank to intervene with large-scale dollar auctions, limiting the annual increase in the debt-to-GDP ratio. Between November and December, the ratio fell by 1.6 points.

• Since President Luiz Inácio Lula da Silva took office in 2023, Brazil’s public debt has risen by 4.4 percentage points, fueling concerns among investors and analysts about the country’s fiscal trajectory.

Spending. Brazil’s federal government closed 2024 with a deficit of BRL 47.6 billion, or 0.4% of GDP, marking a significant improvement from the BRL 296 billion shortfall (2.3% of GDP) recorded a year prior.

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