Latin America Advisor 2026-07-16 – Inter-American Dialogue

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

July 16, 2026

What’s Behind Brazil’s Growing Fiscal Deficit?

Brazil’s government recorded a deficit of more than $10 billion in May. The country’s Congress is pictured. // File Photo: Mario Roberto Duran Ortiz via Wikimedia Commons.

Q

Brazil’s government recorded a primary deficit of 53.3 billion reais ($10.2 billion) in May, the National Treasury reported on June 29, the largest deficit for a month in inflation-adjusted terms since 2024. At the same time, Treasury Secretary Daniel Leal said he expects spending as a share of gross domestic product to decelerate and end the year at around 19 percent of GDP. What explains the increase in Brazil’s primary deficit and what is behind the expected decline of spending? How likely is spending to fall to around 19 percent of GDP by the end of the year? How are Brazil’s fiscal policies likely to affect inflation, interest rates and investor confidence in the months ahead, particularly as the government balances its re-election agenda with the need to demonstrate fiscal discipline?

A

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Diego Arria
Director,
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Merike Blofield
Professor of Political Science,
University of Hamburg

Devry Boughner Vorwerk
CEO,
DevryBV Sustainable Strategies

Joyce Chang
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J.P. Morgan

Marlene Fernández
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Jon E. Huenemann
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James R. Jones
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Craig Kelly
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Int’l Gov’t Relations,
Exxon Mobil

Barbara Kotschwar
Professor of Political Economy,
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John Maisto
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US Education Finance Group

Nicolas Mariscal
Chairman,
Grupo Marhnos

Thomas F. McLarty III
Chairman,
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Beatrice Rangel
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AMLA Consulting

Ernesto Revilla
Head of Latin American Economics, Citi

Gustavo Roosen
President,
IESA

Andrés Rozental
President, Rozental &
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Shelly Shetty
Managing Director,
Sovereigns, Fitch

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