Rising Public Debt Strains Credit and Fuels Uncertainty in Brazil

The Brazilian government is facing a lack of control over public accounts that threatens to restrict credit access for families and businesses. Gross debt reached 82.9% of the Gross Domestic Product in August 2026 and projections suggest this figure could reach 86.4% by the end of 2027.

Rising debt levels combined with high interest rates increase the risk perceived by investors. With 90% of federal expenses classified as mandatory, the room for rapid spending cuts is limited. This situation requires deep structural reforms to restore market confidence.

The cooperative credit sector, which manages 1.04 trillion reais in assets, has also entered the economic team's radar. The government is evaluating the taxation of instruments such as LCAs and LCIs to finance the deficit. This move could increase financing costs for agribusiness and reduce the supply of productive capital.

Simultaneously, the 2027 budget includes a 16.6% increase in non-mandatory expenses for the Empresa Brasil de Comunicação. The 207.9 million reais allocated for the state-owned company's discretionary spending contrasts with the fiscal adjustment that experts argue is necessary to stabilize the public debt trajectory.

The financial market has reacted with caution while observing the rising dollar and instability on the stock exchange. The lack of a spending control plan is fueling demands for immediate measures. These include a review of linked expenses and the pursuit of greater autonomy for the economic team.