The Brazilian public sector spent 10 billion reais ($1.8 billion) more than it collected in taxes in August, a shortfall that keeps inflation high and makes everyday credit more expensive for families buying groceries or paying off a car loan. The data was published on Wednesday (30) by the Central Bank. While the monthly gap was narrower than the 17.3 billion reais deficit recorded in August last year, it pushed national debt to fresh highs.

With this result, gross general government debt climbed to 82.9% of Gross Domestic Product (GDP), totaling 11.05 trillion reais. This represents the highest debt load since March 2021, when the country was coping with peak emergency spending during the pandemic. In practical terms, the national debt now equals roughly eight years of total household consumption across the country.

Understanding the primary deficit

Explained: the primary deficit measures the difference between government tax revenues and spending on public services, excluding interest payments on existing debt. When spending exceeds revenue, the state must borrow more money to fund its daily operations. This is similar to a household spending more than its monthly paycheck and relying on an expensive bank overdraft to cover basic utility bills.

The fiscal picture becomes more challenging when interest charges are included, which totaled 1.18 trillion reais over the past 12 months. With the benchmark Selic interest rate set at 13.75% per year to fight inflation, debt service costs now exceed the federal government's combined annual budgets for public healthcare and education. Including these interest payments, the total nominal deficit reached 116 billion reais in August alone.

From January to August 2026, the accumulated primary deficit reached 88.9 billion reais, worsening from the 61.8 billion reais deficit recorded in the same period last year. The federal government accounted for the bulk of the shortfall with a 14.7 billion reais deficit in August, while state and municipal governments and state-owned firms posted a combined surplus of 4.7 billion reais. The government continues to rely on its fiscal framework, a set of spending rules designed to cap expenditure growth below revenue expansion.