Brazil government posts worst primary deficit for March in nearly 30 years

Brazil’s central government posted a primary deficit of 73.783 billion reais in March this year, the National Treasury said on Wednesday (April 29). The result, the worst for the month since the historical series began in 1997, was affected by an advance in court-ordered debt payments, according to the government.

Normally, most disbursements related to court rulings occur later in the year. That was the case last year, when the main payment wave took place in July.

Even so, the result came in worse than analysts had expected. Economists surveyed by Reuters had forecast a deficit of 71.6 billion reais. In the same month of 2025, the government posted a surplus of 1.527 billion reais.

In March 2025, 357 million reais were paid in court-ordered debt. This year, that figure reached 35.3 billion reais.

Marcus Pestana, of the Independent Fiscal Institution, a Senate-linked body, said the result reflects payment-flow management, but that the advance does not yet “raise a yellow flag regarding the government’s ability to meet its 2026 primary balance targets.” He also noted that the February result had come in slightly above expectations.

Last month’s performance reflected net revenue, excluding transfers to regional governments, of 196.098 billion reais, a real increase of 7.5% from the same period of 2025, and total spending of 269.881 billion reais, a real rise of 49.2%.

The Treasury also said in its notes that another important factor behind the result was the granting of salary increases to federal civil servants in 2025 and 2026. “It should be noted that, in 2025, the financial effects of the pay adjustment materialized from the month of May onward,” it said.

In the first quarter of 2026, the government posted a deficit of 17.1 billion reais. In the same period last year, there had been a surplus of 55 billion reais. Total spending rose 18.2%, while revenue grew at a slower pace of 4.2%.

Revenue from the financial transactions tax, or IOF, jumped 49.7% from the same month in 2025. A total of 2.8 billion reais was collected, reflecting foreign-exchange and credit operations, as well as higher tax rates introduced last year.

On the other hand, dividends and profit-sharing from state-owned companies fell 40.4%. According to the Treasury, “the reduction in this line item reflected, to a large extent, lower payments by Petrobras, down 1.7 billion reais, Banco do Brasil, down 1.1 billion reais, and Eletrobras, down 611.5 million reais.”

In the 12-month rolling period, the central government posted a deficit of 136.5 billion reais, or 1.03% of gross domestic product.

Source: Folha de São Paulo

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