Brazil Fiscal Deterioration: Deficit Widens Despite Loosened Targets

Brazil's government announced a third revenue and expenditure review that, despite cutting the primary surplus target by R$ 62.8 billion, still projects a primary deficit of R$ 13.6 billion for 2026, versus a prior positive result of R$ 10.8 billion. The real deficit for the year rose to R$ 80.9 billion, indicating fiscal deterioration and a lack of spending control. This raises concerns about Brazil's fiscal sustainability and may pressure the BRL and local rates.