Brazil May‘s fiscal print misses expectations as focus shifts toward 2027

Research evidence excerpt

Brazil May‘s fiscal print misses expectations as focus shifts toward 2027

J P M O R G A N Latin America Economic Research

30 June 2026

Brazil

May's fiscal print misses expectations as focus shifts

toward 2027

• May’s primary deficit was wider than expected, reflecting weaker regional EM, Economic and Policy Research

results and faster federal execution Mirella Sampaio

• Nominal deficit remains near double digits as the interest burden pushes debt (55-11)mirella.sampaio@jpmorgan.com4950-3289

ratios higher

Cassiana Fernandez

• Structural outlook remains challenging, with the policy debate a key risk as the (55-11) 4950-3369

electoral calendar tightens cassiana.fernandez@jpmorgan.com

Banco J.P. Morgan S.A.

BCB’s consolidated public-sector statistics showed a primary deficit of R$56.1bn

in May, deteriorating from -R$33.7bn in May 2025 and coming in weaker than both

consensus (-R$53.0bn) and our forecast (JPM: -R$52.5bn). The central

government accounted for most of the shortfall (-R$55.2bn), while regional

governments posted a -R$1.2bn deficit and SOEs a +R$0.3bn surplus. The miss

relative to our preview was concentrated in the regional print, which we view as

consistent with the usual month-to-month volatility in subnational execution and

transfers. Over 12 months, the consolidated primary deficit has widened to R

$149.0bn (1.14% of GDP; Figure 1), 0.16pp worse than through April.

The interest bill remains the binding constraint. BCB reported nominal interest of

R$107.5bn in May (vs R$92.1bn a year earlier), pushing 12m interest to R$1,111bn

(8.48% of GDP). The nominal deficit was R$163.7bn in May, and R$1,260bn

(9.62% of GDP) over 12 months (Figure 2). Debt ratios rose further: net debt DLSP

increased 0.7pp to 67.9% of GDP, while gross debt DBGG increased 0.9pp to