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For the first time in its history, Brazil has reached a gross debt of R$9 trillion, representing 78,64% of its GDP. The increase, driven by high interest rates and deficits, raises alarms for the economy. The Lula administration faces challenges in containing the growth of this monumental debt.
Brazil has just crossed an unprecedented and worrying milestone. For the first time in history, the country's gross debt exceeded the impressive figure of R$9 trillion.
This milestone, reached in October 2024, may seem like a distant number, but the consequences of this escalation could directly affect Brazilians' pockets and the national economy.
According to data released by the central bank this Friday (November 29, 2024), the general government gross debt (GGGD) reached R$9,032 trillion, which represents an increase of 1,16% compared to September.
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The growth is even more frightening when compared to the same period in 2023, with an increase of 14,13%.
What is DBGG and why does it matter?
A DBGG includes debts of the federal government, INSS (National Institute of Social Security), and also of states and municipalities.
According to the Central Bank, the debt stock increased by R$952,6 billion in 2024 alone. Since the beginning of Lula's government, the increase has already reached an impressive R$1,8 trillion.
The historical series, which began in 2006, reveals the growth of debt in different administrations.
During Lula's first government (2007-2010), the debt grew by R$674,9 billion. During Dilma Rousseff's administration (2011-2014), the increase was R$1,241 trillion.
The Bolsonaro government also saw debt soar, with an increase of R$1,952 trillion. Now, in Lula's second term, the numbers continue on an upward trajectory.
Weight in GDP reaches highest level since 2021
One of the most commonly used ways to measure the impact of debt is to compare it to Gross Domestic Product (GDP). In October 2024, gross debt represented 78,64% of GDP.
This is the highest level in three years, since October 2021, when it reached 79,1%.
This escalation corresponds to an increase of 4,22 percentage points in 2024 alone quality 6,96 percentage points since the beginning of the current government.
The growth, although expected by many economists, raises questions about the country's fiscal sustainability in the medium and long term.
The impact of interest
Another alarming fact is the weight of nominal interest on public debt.
Interest expenses totaled R$111,6 billion in October 2024 alone, a jump of 80,3% compared to October 2023, when they totaled R$61,9 billion.
Maintaining the Selic rate at high levels is one of the main factors that increase the cost of debt.
With the Selic rate high, financing public debt becomes even more onerous.
For experts, this creates a cascade effect, making investments difficult and reducing the government's room for maneuver.
The trajectory of debt over the years
The debt history reveals exponential growth over the last few decades. Check out the figures for each administration:
- Lula's government (2007-2010): R$674,9 billion;
- Dilma's government (2011-2014): R$ 1,241 trillion;
- Dilma/Temer Government (2015-2018): R$ 2,020 trillion;
- Bolsonaro Government (2019-2022): R$ 1,952 trillion;
- Lula's government (2023-2024): R$1,807 trillion (so far).
This growth reflects not only the expansion of public spending, but also economic crises and changes in tax policies.
What to expect in the future?
Experts point out that, to avoid a fiscal collapse, Brazil will need to adopt adjustment measures, such as spending cuts and structural reforms.
Without a change in the debt trajectory, the country may face greater difficulties in attracting investment and maintaining a balance in public accounts.
The question that remains for Brazilians is: How will this monumental debt impact the future of the economy and people's lives?
The Lula government has a significant challenge ahead, balancing economic growth and fiscal responsibility.
In your opinion, what needs to be done for Brazil to reverse this situation? Share your opinion in the comments!
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