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Brazil Hits For The First Time In History A Gross Debt Of R$ 9 Trillion, Representing 78.64% Of GDP. The Rise, Driven By High Interest Rates And Deficits, Raises Alarm Bells For The Economy. The Lula Government Faces Challenges To Contain The Growth Of This Monumental Indebtedness.
Brazil has just crossed an unprecedented and worrying mark. 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 a distant number, but the consequences of this escalation can directly affect the pockets of Brazilians 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, representing an increase of 1.16% compared to September.
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A new Brazilian shopping center worth R$ 400 million will be built in an area equivalent to more than 4 football fields, featuring 90 stores, 5 cinemas, a supermarket, a college, and parking for 1,700 cars, potentially generating 3,000 jobs.
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Larger than entire cities in Brazil: BYD is building a 4.6 km² complex in Bahia with a capacity for 600,000 vehicles per year, but the discovery of 163 workers in conditions analogous to slavery has shaken the entire project.
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With an investment of R$ 612 million, a capacity to process 1.2 million liters of milk per day, Piracanjuba inaugurates a mega cheese factory that increases national production, reduces dependence on imports, and repositions Brazil on the global dairy map.
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Brazilian city gains industrial hub for 85 companies that is equivalent to 55 football fields.
The growth is even more alarming when compared to the same period in 2023, with a rise of 14.13%.
What Is The GGGD And Why It Matters?
The GGGD Includes The Federal Government’s Debts, The INSS (National Institute Of Social Security), And Also Those Of States And Municipalities.
According To The Central Bank, The Total Debt Increased By R$ 952.6 Billion In 2024 Alone. Since The Beginning Of The Lula Government, The Increase Has Reached An Impressive R$ 1.8 Trillion.
The historical series, started in 2006, reveals the growth of the debt under different administrations.
During Lula’s First Government (2007-2010), The Debt Grew By R$ 674.9 Billion. Under Dilma Rousseff’s Administration (2011-2014), The Jump 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 Ascending Trajectory.
Weight On GDP Reaches Highest Level Since 2021
One Of The Most Used Ways To Measure The Impact Of The Debt Is To Compare It To The Gross Domestic Product (GDP). In October 2024, The Gross Debt Represented 78.64% Of The 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 Just In 2024 And 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 Rates
Another Alarming Data Is The Weight Of The Nominal Interest On Public Debt.
Spending On Interest Totaled R$ 111.6 Billion Just In October 2024, A Jump Of 80.3% Compared To October 2023, When It Totaled R$ 61.9 Billion.
The Maintenance Of The Selic Rate At Elevated Levels Is One Of The Main Factors That Aggravate The Cost Of The Debt.
With The High Selic Rate, Financing Public Indebtedness Becomes Even More Burdensome.
For Experts, This Creates A Cascading Effect, Hindering Investments And Reducing The Government’s Room For Maneuver.
The Debt Trajectory Over The Years
The Debt History Reveals Exponential Growth Over The Last Few Decades. Check Out The Numbers From Each Administration:
- Lula Government (2007-2010): R$ 674.9 Billion;
- Dilma 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 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 Fiscal 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 Investments And Maintaining The Balance Of Public Accounts.
The Question That Remains For Brazilians Is: How Will This Monumental Debt Impact The Future Of The Economy And The Lives Of People?
The Lula Government Faces A Significant Challenge Ahead, Balancing Economic Growth And Fiscal Responsibility.
In Your View, What Needs To Be Done For Brazil To Reverse This Situation? Share Your Opinion In The Comments!
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