FX.co ★ Brazil Public Deficit Widens to May Record

The Brazilian government posted a nominal budget deficit of BRL 163.7 billion in May 2026, widening from BRL 125.9 billion in the same month of the previous year. The figure exceeded market expectations of BRL 148.3 billion and marked the largest deficit on record for May. The federal government’s cumulative deficit rose to BRL 55.2 billion for the year. Despite the wider shortfall, the deficit remained relatively stable as a share of Brazil’s GDP, at 9.6%. The increase in public spending was consistent with typical patterns observed in election years in the country. The Brazilian central bank has indicated that high levels of deficit spending by the central government—particularly direct cash welfare transfers—are among the main drivers of persistent inflationary pressures. Brazil continues to have one of the highest real interest rates in the world.