Brazil’s Annualized Fiscal Deficit Hits Record R$1.218 Trillion as Debt Breaches 80% of GDP

Overview

• Brazil’s public sector ran a nominal deficit of R$1.218 trillion in the 12 months to March, the largest in central bank records that start in 2002.
• Interest costs drove much of the gap, with annualized interest reaching R$1.08 trillion and March’s interest bill at R$118.9 billion, up from R$75.2 billion a year earlier.
• The primary balance also turned negative, with a R$137.1 billion deficit over 12 months and a R$80.7 billion shortfall in March led by the federal government.
• Local reports link part of March’s jump to one-off outlays, including R$70.4 billion in court-ordered debts known as precatórios and early payment of the INSS 13th benefit, which put cash into households now but added to the deficit.
• Gross debt climbed past 80% of GDP in March and borrowing costs on domestic bonds hover near 13%, while abroad the U.S. debt held by the public reached 100.2% of GDP and Fitch flagged pressure on its credit rating.