R$ 1.182 trillion. That is what Brazil's federal government now pays in a single year just to cover interest on its public debt, according to a report by Estadão. In practice, it is money that leaves the budget to reward creditors and never reaches hospitals, schools or public works.
The bill works out to roughly R$ 3.2 billion a day, nearly 15 times the R$ 80.9 billion deficit the government itself projects for this year. Whoever wins Sunday's (25) runoff and climbs the ramp of the Planalto presidential palace on January 5, 2027, inauguration day, inherits that tab.
Gross federal debt reached 82.9% of GDP in August 2026, or R$ 11.1 trillion, according to the Central Bank. International Monetary Fund projections indicate that only Egypt and Bahrain are expected to spend more on interest than Brazil this year.
Understanding the straitjacketed budget
For context: GDP is the sum of everything the country produces in a year, and the debt-to-GDP ratio measures the size of public debt against that wealth. The higher the percentage, the more interest the government pays and the less is left for services and investment.
The core problem is a budget with almost no room to maneuver. Mandatory expenses, those the government cannot legally skip, account for 92% of the total, and pensions, welfare, health and education together exceed 80%. These outlays grow by their own rules: pension and social benefits track the minimum wage, which rises above inflation, while health and education spending is tied to tax revenue.
Pressure mounted in the final stretch of the campaign. President Lula raised Bolsa Familia, the flagship cash transfer program, by 15% just 17 days before the first round, and Folha de S.Paulo puts the cost of election-year measures approved for 2026 and 2027 at nearly R$ 300 billion. Planning Ministry bulletins have warned for months of the risk of a "shutdown", a halt to government services for lack of funds.
For 2027 the government forecasts a surplus of R$ 18.6 billion, but the budget will have to be rebuilt, with revised revenue estimates and the task of fitting in campaign promises. On Lula's side, Folha notes he promised to keep fiscal expansion going, which would make any adjustment harder to explain to voters. On Flavio Bolsonaro's side, the PL candidate denies he would cut social programs, yet promises an adjustment of about R$ 200 billion and the return of Perse, a tax forgiveness program that, according to Folha, eased the way for money launderers linked to the PCC criminal group.
What the experts say
"The first and most effective measure the government can take is to restore the credibility of fiscal management as soon as possible. The government has to be willing to use the capital of the elections and address the issue, mainly the indexation of the budget," Senate budget consultant Daniel Couri told Estadao.
Economist Selene Peres Nunes, one of the authors of Brazil's Fiscal Responsibility Law, says she sees no way out without touching pensions, welfare, health and education. She argues, however, that the adjustment should come with cuts to salary perks and an administrative reform that reaches the "upper floor", the officials and civil servants with the highest pay.
The clock is ticking for the country's 44th president. As Estadão reported, the Lula government itself projected that, if nothing changes, there will not be enough money for non-mandatory expenses, such as investment and the day-to-day running of the state, starting in 2028.