Brazil Treasury Raises Debt Forecast, Projects 88.6% Peak in 2032

Overview

• New Treasury projections put gross public debt at 83.6% of GDP in 2026 and 86.1% in 2027, peaking at 88.6% in 2032 before easing to 88.0% in 2035 in the reference scenario.
• In a more conservative ‘initial’ scenario, debt surpasses 90% of GDP by 2030 and reaches about 95.4% by 2035, with no sign of stabilization.
• An alternative path using Focus survey macro assumptions and Treasury primary balances is far worse, breaching 100% of GDP in 2031 and climbing to 115.4% in 2035.
• Treasury attributes the deterioration mainly to weaker primary results linked to Constitutional Amendment 136, alongside higher interest and lower nominal GDP assumptions.
• The government expects fiscal deficits through 2027 and says additional revenue measures will be needed to hit fiscal targets, while Haddad notes the deficit rises to roughly 0.48% of GDP when judicial items and precatórios are included.