Brazil’s federal state-owned companies recorded a R$2.73 billion ($500 million) deficit from January to April 2025, the worst first-quarter result since 2002, according to Central Bank data.
This marks the third consecutive annual increase under President Lula’s administration, following deficits of R$1.84 billion in 2023 and R$1.68 billion in 2024.
The figures exclude Petrobras, Banco do Brasil, and other financial institutions, focusing on 19 federally managed firms.
The postal service Correios drove nearly half of the 2024 federal deficit, reporting R$3.18 billion in losses due to tax policy changes and legal settlements.
A government program taxing foreign online purchases reduced Correios’ international revenue by R$2.2 billion, while R$1.3 billion went toward court-ordered debt payments.
Under Lula, Brazil’s State Companies Lose $2.73B in Early 2025, Worst Result Since 2002
Management Minister Esther Dweck defended the deficits as investment-driven, stating companies used cash reserves for projects rather than operational failures.
For example, Dataprev invested R$96.9 million in biometric ID systems despite showing an accounting deficit.
Under Lula, Brazil’s State Companies Lose $2.73B in Early 2025, Worst Result Since 2002
Critics highlight structural risks as federal firms’ combined deficit reached R$9.1 billion by November 2024.
Gabriel Barros of ARX Investimentos warns this reverses prior fiscal stabilization, noting the 2024 budget allowed R$5 billion in deficit waivers.
Transparency concerns persist—the federal state-owned companies’ bulletin hasn’t been published in two years.
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The government faces dual challenges: a R$81.5 billion revenue shortfall prompted a R$20.7 billion spending freeze in May 2025, while legislative proposals to expand state banks’ roles drew economist skepticism.
Marcos Mendes of Insper criticized a bill creating a Caixa Econômica foundation as a “terrible” move enabling off-budget spending.
These deficits matter because taxpayers ultimately fund gaps through potential service cuts or tax hikes.
With Brazil’s public debt near 80% of GDP, sustained losses could strain resources meant for healthcare or infrastructure.
The trend underscores a broader tension between public-sector growth goals and fiscal sustainability—a balancing act shaping Brazil’s economic trajectory.
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