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1. Boletim Focus: High Selic rate, falling inflation and dollar at R$5.72

The Boletim Focus released on Tuesday (24) by the Central Bank brought significant revisions to economic forecasts. The Selic rate, held at 15% after last week’s hike, is expected to remain at this level through the end of the year, according to financial market analysts. This rate, which serves as a benchmark for interest rates in the country, remains high in a context of combating inflation. Meanwhile, the dollar is projected to end 2025 at R$5.72.

Inflation, measured by the IPCA index, continues on a downward trend. The current estimate stands at 5.24% for the year, slightly below last week’s 5.25%, the fourth consecutive downward revision. At the same time, GDP growth expectations have increased for the third week in a row, reaching 2.21%. This outlook reflects optimism about economic activity, despite high interest rates and a pressured exchange rate.

Folha de S.Paulo: Economistas aumentam previsão dos juros e reduzem a da inflação 
ISTOÉ Dinheiro: Em ata, Copom sinaliza manutenção da Selic em 15% ‘por período bastante prolongado’ 

2. Deficit falls in May and public accounts post best results since 2021

The federal government recorded a primary deficit of R$40.6 billion in May 2025, according to data released by the National Treasury on Thursday (27). Despite the negative result, this marks an improvement compared to the same month in 2024, when the deficit was R$60.4 billion. The performance exceeded market expectations, which projected a shortfall of R$62.2 billion. The positive result is mainly attributed to increased revenue and a reduction in discretionary spending.

On the revenue side, there was significant growth in income tax withheld at source and in social security contributions, along with a rise in import-related tax collections. On the expenditure side, cuts in health and education budgets stood out, as well as a R$3.9 billion reduction in social security benefits. The absence of emergency spending, such as that triggered by the floods in Rio Grande do Sul last year, also contributed to easing the fiscal burden.

From January to May, the government posted a primary surplus of R$32.2 billion, reversing the R$28.7 billion deficit recorded in the same period of 2024. This is the best performance since 2022 and is partly due to differences in the schedule for court-ordered government payments (“precatórios”), which amounted to R$30.8 billion in 2025, compared to a greater concentration of those expenses in February of the previous year. Net revenue for the period rose by 8.6%, reaching R$968.6 billion, while expenditures fell by 3.3%, totaling R$936.4 billion. 

Exame: Contas públicas do governo têm déficit de R$ 40,6 bilhões em maio  

3. Fitch maintains Brazil’s credit rating with stable outlook

Credit rating agency Fitch has decided to maintain Brazil’s sovereign debt rating two notches below investment grade, reaffirming a stable outlook. According to the agency, the decision is based on structural factors such as high and rising public debt, budgetary rigidity, weak governance, and low potential economic growth. In addition, the upcoming 2026 Brazilian presidential elections and the tense relationship between the Executive and Congress were cited as obstacles to resolving fiscal challenges in the short term.

This assessment reinforces the relatively stable international perception of Brazil’s credit risk, while also highlighting the limited prospects for an upgrade in the near term. Since 2023, Brazil has been rated two levels below investment grade by both Fitch and S&P, and one level below by Moody’s, which recently revised the country’s outlook from positive to stable. The Ministry of Finance has not officially commented on Fitch’s decision. 

Agência Brasil: Fitch mantém nota da dívida brasileira e não prevê mudanças  

4. Congress overturns IOF decrees, government considers legal action

Brazil’s National Congress delivered a historic blow to President Lula’s administration by overturning the decrees that raised the IOF (Financial Operations Tax) rates, in a joint decision by the Chamber of Deputies and the Senate. The vote was decisive: 383 deputies supported the repeal, while the Senate passed it by symbolic vote. This marks the first time since President Collor’s administration in 1992 that a presidential decree has been annulled by congressional vote, highlighting growing tensions between the Executive and Legislative branches.

The decision caught the government off guard, as it expected a more cautious political environment during the São João congressional recess. Not even key government allies or Institutional Relations Minister Gleisi Hoffmann were informed in advance. Chamber President Hugo Motta stated that a lack of dialogue and what he described as the government’s attempts to undermine Congress led to the vote. The opposition and parts of the Centrist bloc (Centrão) also accused the administration of trying to shift blame onto legislators for recent electricity bill hikes.

In response to the setback, the government is considering taking the matter to court, though members of its coalition fear this could deepen the political crisis. Within the Presidential Palace, the assessment is that the episode undermines governability and could jeopardize progress on the economic agenda. Minister Gleisi argued there is no legal basis to repeal the decrees, and the Workers’ Party (PT) questions whether Congress overstepped its constitutional powers. The crisis underscores the administration’s increasing struggle to manage its congressional base and contain the momentum of independent legislative initiatives.

Folha de S.Paulo: Congresso derruba decretos do IOF, e governo avalia judicialização após derrota 

5. Brazil launches global roadmap to finance climate action ahead of COP30

During the UN Climate Conference in Bonn, Germany, Brazil unveiled the “From Baku to Belém” roadmap, an initiative aimed at guiding climate finance efforts leading up to COP30, set to take place in Belém in 2025. Ambassador Tatiana Rosito, representing Brazil’s Ministry of Finance, emphasized that the document seeks to be clear, credible, and actionable, with a focus on integrating climate goals into countries’ macroeconomic policies. The objective is to mobilize US$1.3 trillion in funding and foster a coordinated response to global warming.

The plan proposes an unprecedented partnership between the Ministries of Finance and Environment, aiming to engage finance ministers in mobilizing both public and private resources for the climate agenda. Rosito highlighted that the COP30 Circle of Finance Ministers is already discussing more accessible financing alternatives for developing countries, with a strong focus on adaptation and loss and damage caused by climate change. COP30 CEO Ana Toni also noted that the roadmap helps to rethink the global financial architecture.

Brazil’s proposal includes concrete recommendations such as the creation of national platforms to connect private capital with socio-environmental projects, as well as mechanisms like carbon pricing and climate-focused oversight of national development banks. According to Simon Stiell, Executive Secretary of the UN Climate Convention, the key challenge now is turning commitments into practical and political action at scale and with urgency. With this roadmap, Brazil positions itself as a leader in the international push for more inclusive and effective climate finance solutions.

Exame: De Baku a Belém: em Bonn, Brasil lança roteiro para financiar clima e foca em ministros das finanças