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1. IMF projects increase in Brazil’s public debt and recommends fiscal reinforcement

The International Monetary Fund (IMF) projects that Brazil’s gross public debt will reach 92% of GDP in 2025, rising to 99.4% in 2029 and stabilizing at that level in 2030. This new estimate is a deterioration compared to the previous projection made in October 2024, which had forecasted 97.6% for the same period. Brazil’s debt remains well above the average for emerging markets, which is 74.8%, or 58.4% when excluding China. The IMF also raised its projection for the government’s nominal deficit, estimating it at 8.5% of the GDP in 2025, influenced by high interest rates and modest economic growth.

The more negative forecasts were influenced by a slight downward revision in Brazil’s economic growth, now estimated at 2% annually for both 2025 and 2026. The IMF highlights that Brazil’s nominal deficit is above the average for major emerging economies and that the debt trajectory is concerning, especially amid global uncertainties and rigid public spending. The report also notes that the primary fiscal balance will remain in deficit until 2026, with a surplus expected only from 2027 onward.

The Fiscal Monitor suggests that countries like Brazil adopt more robust measures to strengthen their fiscal frameworks. Recommendations include rationalizing tax expenditures, broadening the tax base, and improving fiscal and budgetary rules. The IMF underscores that Brazil is among the countries expected to contribute most to the increase in global public debt by the end of the decade, alongside nations such as China, the United States, and France.

Valor Econômico: FMI vê dívida bruta do Brasil perto de 100% do PIB em 2029

2. World Bank revises down growth forecast for Brazil and Latin America

The World Bank has lowered its economic growth projection for Brazil in 2025 to 1.8%, down from the previous estimate of 2.2%. The revision reflects a more cautious outlook for Latin America and the Caribbean, whose forecast was adjusted from 2.5% to 2.1%, making it the slowest-growing region globally. The new scenario reflects a more uncertain international environment, pressured by factors such as delayed interest rate cuts in developed countries, the impact of global trade restrictions, China’s economic slowdown, and cuts to development assistance programs.

In addition to Brazil, other countries in the region also faced downward revisions. Mexico’s growth forecast was cut to zero, while Argentina was one of the few exceptions, with its projection raised to 5.5% in 2025, driven by a recent $20 billion agreement with the International Monetary Fund (IMF). In contrast, the IMF also downgraded its expectations for Brazil, now projecting 2% growth for 2025 and 2026. These estimates differ from the more optimistic forecasts of the Brazilian government, which expects growth of 2.3% in 2025 and 2.5% in 2026.

The region also faces structural challenges, such as high public debt, which reached 63.3% of regional GDP in 2024, up from 59.4% in 2019. World Bank experts highlight the importance of strategies focused on boosting productivity, diversifying export destinations, and increasing integration into global trade through investments and the near-shoring trend. Brazil’s economic slowdown is also attributed to persistent inflation and the maintenance of high interest rates, which impact consumption and access to credit.

G1: Banco Mundial corta estimativa de crescimento para o Brasil em 2025 e destaca incertezas
InfoMoney: Banco Mundial corta estimativa de crescimento para o Brasil em 2025

3. Brazil investigates billion-real fraud against retirees and fires INSS president

A major police operation in Brazil has uncovered a fraud scheme that allegedly siphoned up to R$ 6.3 billion (approximately USD 1.2 billion) from the public retirement system, the National Institute of Social Security (INSS). According to the investigation conducted by the Federal Police and the Office of the Comptroller General, associations allegedly representing retirees were charging unauthorized monthly fees without the beneficiaries’ consent. These charges were deducted directly from monthly pension and retirement payments, falsely simulating enrollment in services such as legal assistance or gym discounts.

The scheme is believed to have operated between 2019 and 2024, affecting thousands of retirees across several Brazilian states. A total of 11 organizations were targeted by the operation, with their contracts suspended to prevent further losses. One of the entities under investigation is the National Union of Retirees (Sindnapi), whose vice president is the brother of Brazil’s current president, Luiz Inácio Lula da Silva. The union denies any wrongdoing.

The case has sparked strong national outcry, both due to the scale of the embezzled funds and its direct impact on a vulnerable population. Brazilian authorities stated that affected beneficiaries can seek compensation, and measures are being taken to prevent future fraud. The operation marks a milestone in the oversight of social benefits in Brazil, highlighting the need to strengthen transparency and control mechanisms over entities that interact with the pension system.

G1: Entenda o esquema de fraudes no INSS que resultou na demissão do presidente do órgão
Agência Brasil: AGU cria grupo para recuperar dinheiro das vítimas de fraude no INSS

4. R$621 billion in tax exemptions projected for 2026

The federal government estimates that it will forgo R$620.8 billion in revenue in 2026 due to subsidies and tax exemptions, equivalent to 4.53% of GDP and over 22% of total projected revenue. These so-called “tax expenditures” are legally granted benefits that reduce federal income and, according to the Budget Guidelines Bill (PLDO), have been growing year after year. To meet its fiscal target of a 0.25% GDP surplus, the Executive Branch needs to raise an additional R$118 billion, a challenge made harder by the escalating volume of tax exemptions. The Simples Nacional program remains the largest contributor, with an estimated impact of R$136.2 billion, followed by benefits for agribusiness and tax-exempt income.

Despite a constitutional amendment passed during the Bolsonaro administration mandating a reduction of these expenditures to 2% of GDP within eight years, little progress has been made. The current economic team, under President Lula’s administration, claims to have been working to reduce these benefits since 2023, but faces strong resistance from organized lobbies in Congress. There is hope that the income tax reform will create an opportunity to reassess these incentives, especially as a trade-off for the proposal to expand the income tax exemption threshold to those earning up to R$5,000. However, the success of this revision depends on the development of a concrete and politically feasible plan to phase out exemptions that have nearly doubled over the past decade.

Valor Econômico: Perda com subsídios e desonerações de tributos vai custar R$ 621 bi em 2026, estima governo

5. Brazil and Chile expand strategic partnership with 13 bilateral agreements

Presidents Luiz Inácio Lula da Silva and Gabriel Boric signed 13 bilateral cooperation agreements during a ceremony at the Palácio do Planalto, marking progress in areas such as foreign policy, public security, infrastructure, culture, agriculture, science, and technology. The agreements celebrate 189 years of diplomatic relations between Brazil and Chile.

Among the key agreements are joint efforts to combat transnational organized crime, cooperation on consular and migration matters, facilitation of audiovisual co-productions, and the promotion of sustainable agricultural development. Additional progress was made in academic and military exchange, support for micro and small enterprises, the use of electronic certification for the trade of animal-origin products, and the advancement of artificial intelligence focused on Latin American languages. These initiatives reflect both countries’ commitment to deeper integration grounded in sustainable development, innovation, and strengthened trade relations.

The agreements reinforce the ties between Brazil and Chile, consolidating an increasingly strategic and cooperative partnership within the regional context.

Poder 360: Lula e Boric assinam 13 acordos de cooperação bilateral
Diário do Comércio: Lula e Boric assinam 13 acordos e ampliam parceria estratégica entre Brasil e Chile