A controversial move by a government bank into online gambling exposes deep rifts within Lula’s administration. It also raises new financial and ethical questions. Meanwhile, Brazil’s public debt has reached historic highs.
A controversial move by a government-owned bank into online betting is sparking fierce debate at the highest levels. Brazil is now at the center of a high-stakes fiscal and political drama, with public debt soaring to unprecedented levels. The government is trying to balance fiscal responsibility, regulatory goals, and coalition demands. This collision of economic pressures and political maneuvering is testing President Luiz Inácio Lula da Silva’s administration.
Brazil’s federal public debt has reached a staggering R$8.1 trillion, according to a July 2025 report from the National Treasury. This is a 2.77% increase over the past month and sets a new record in the country’s financial history. The rise reflects persistent budget deficits, high interest rates, and mounting mandatory expenditures, particularly on social security and subsidies. To cover the budget gap and refinance maturing obligations, the government issued R$168 billion in new securities in June alone. The debt ballooned by more than R$800 billion over the past 12 months, largely due to the Central Bank keeping the Selic rate at 10.75%, one of the highest real interest rates in the world.
The cost of servicing this debt is eye-popping. Government spending on interest payments has now topped R$800 billion annually, or about 7.5% of the GDP of Brazil. Former Secretary of the Treasury and public accounts specialist Felipe Salto told BNL Data that the problem isn’t just the absolute size of the debt. He explained that the real issue is how much it costs to maintain it. With high interest rates, as well as controlled inflation, Brazil pays one of the highest real rates in the world.
