Brazil’s overall budget deficit has widened to nearly 10% of gross domestic product (GDP) in the 12 months through June, central bank data showed. The shortfall rose to 1.3 trillion reais, equivalent to 9.99% of GDP, from 9.61% in May and 7.27% a year earlier.

Fiscal Concerns Linger

The reading was the highest since April 2021, when the deficit reached 10.25% of GDP as Latin America’s largest economy grappled with extraordinary spending linked to the COVID-19 pandemic. Many economists see Brazil’s fast-growing interest bill amid high interest rates and elevated risk premiums as its biggest fiscal vulnerability.

Gross public debt rose 0.9 percentage points from May to 81.9% of GDP, above the 81.5% forecast by economists polled. Since President Luiz Inacio Lula da Silva took office in January 2023, Brazil’s gross debt has increased 10.2 percentage points of GDP.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.