Brazil's Finance Minister Calls High Interest Rates the Economy's 'Bottleneck'

Overview

• Dario Durigan said on Saturday that Brazil's high Selic rate is the economy's 'gargalo' and described the Finance Ministry as the 'least guilty' actor for the current level of rates.
• The central bank has trimmed the Selic to 14.25% after a June 17 cut, but that rate remains one of the highest in real terms globally and continues to raise borrowing costs for businesses and the government.
• Brazil spent an estimated 8.8% of GDP on interest in 2024, the largest share in the G20, and gross general government debt rose to 81.1% of GDP in May, increasing pressure on public finances.
• Analysts warn that a large share of public debt is indexed to the Selic or price measures, which causes interest spending to climb quickly and creates a feedback loop of deficits, higher debt and higher rates; independent projections show debt could reach about 115% of GDP by 2036 without structural changes.
• Durigan said the government will pursue multi‑year fiscal adjustments—including spending restraint, reviewing tax benefits and higher taxation of the wealthy—and argued those steps are needed to improve fiscal credibility so monetary easing can proceed more decisively.