Brazil’s Treasury projected on Monday that the gross debt of Latin America’s largest economy will only begin to decline in 2028, after an increase of 10 percentage points during the current mandate of President Luiz Inácio Lula da Silva.
In its fiscal projections report, the treasury estimated that the country’s gross debt-to-GDP ratio will peak at 81.8% in 2027 before beginning a downward trajectory the following year, falling to 81.6%.
According to the Treasury, Brazil’s gross debt, an indicator of solvency, will reach 81.7% of GDP in 2026, the last year of Lula’s government, compared to 71.7% when he took power.
Concern about the trajectory of Brazilian debt has deteriorated market confidence in the country’s assets, which was exacerbated after the Government presented a fiscal package considered insufficient by investors to stop growing mandatory spending.
This has contributed to a 20% depreciation of the Brazilian real so far this year. against the US dollar Brby and a sharp rise in interest rate futures. Brazil’s gross debt is considered high compared to its emerging market peers.
In the publication, the Treasury forecasts primary deficits of 0.6% of GDP for this year, of 0.4% in 2025 and 0.1% in 2026 for the central government.
These forecasts contrast with the Government’s official objectives of a zero deficit this year and next, and a primary surplus of 0.25% in 2026.
