Brazil’s Fiscal Deficit Falls to 9.34% of GDP in July

Brazil’s public finances recorded their first improvement since December in July, although public debt continued to climb. The overall deficit fell by 0.64 percentage points from the previous month to 9.34% of gross domestic product, according to the Central Bank.

The negative balance reached 1.24 trillion reais, equivalent to 239.92 billion dollars or 206.8 billion euros, over the 12 months ending in July. The primary deficit, which excludes interest payments and serves as the main measure of Brazil’s fiscal health, stood at 0.67% of GDP over the same period, an improvement of 0.52 percentage points.

Public debt rose by 0.6 percentage points to 82.5% of GDP. The Central Bank attributed the deterioration mainly to interest payments, leaving the improvement in the primary balance alongside a higher overall debt burden.

The figures have added weight to a debate already shaping Brazil’s presidential and legislative elections in October. President Luiz Inácio Lula da Silva, who is seeking re-election, said last week that he was not concerned about public debt. He argued that faster economic growth would reduce debt relative to GDP.

The government’s 2027 budget projects a primary surplus of 0.1%, according to Finance Minister Dario Durigan. Opposition candidate Flávio Bolsonaro has promised to reduce public debt through spending cuts, but has not set targets or explained his plans in detail. Brazil’s economy grew 2.3% in 2025, while market forecasts point to a sharper slowdown in the election year, with 2026 growth expected to remain around 2%.