Public Companies’ Deficit Reaches R$ 7.4 Billion by May, Surpasses Last Year’s Figure

State-Owned Companies Record R$ 7.4 Billion Deficit by May 2026, Surpassing Full-Year 2025 Loss

Brazil’s state-owned companies accumulated a primary deficit of R$ 7.4 billion from January to May 2026, according to data from the Central Bank’s Fiscal Statistics Report. The result has raised concern because the deficit registered in just the first five months of the year has already exceeded the total deficit recorded by state-owned companies during the entire year of 2025. The data also show that the 2026 figure is roughly double the deficit seen in the same period last year, in nominal terms.

The Central Bank data show that the negative result was mainly driven by a sharp deficit in January. In that month alone, state-owned companies recorded a deficit of R$ 4.869 billion, which became the biggest contributor to the weak result for the year so far. After January, the deficit continued in February, March and April, before a small surplus was registered in May.

Month-Wise Performance of State-Owned Companies

The month-wise trajectory shows how the deficit accumulated during the first five months of 2026. In January, state-owned companies posted a deficit of R$ 4.869 billion. In February, the deficit was R$ 568.14 million. In March, the negative result stood at R$ 468.55 million. In April, the deficit widened again to R$ 1.78 billion. However, in May, the companies recorded a surplus of R$ 273.35 million, showing a temporary improvement after four consecutive months of negative results.

Even though May brought some relief, the surplus was not enough to reverse the heavy losses recorded earlier in the year. The January result alone had already created a large gap, and the additional deficits in February, March and April pushed the total deficit to R$ 7.4 billion by the end of May.

Largest Deficit for the Period in Nominal Terms

In nominal terms, meaning without adjusting for inflation, the deficit from January to May 2026 is described as the largest in the historical series for this period. This means that, when looking only at the actual value reported in reais, the current deficit is higher than previous deficits recorded for the first five months of the year.

This point is important because nominal figures do not account for changes in purchasing power over time. Inflation-adjusted figures may tell a slightly different story, but the nominal result still matters because it shows the direct size of the fiscal gap reported in the government’s accounts.

Federal State-Owned Companies Account for Most of the Deficit

Federal state-owned companies represented the largest share of the deficit from January to May 2026. According to the breakdown, federal state-owned companies recorded a deficit of R$ 5.9 billion, while state-owned companies controlled by states posted a deficit of R$ 1.5 billion. Municipal state-owned companies, on the other hand, recorded a small surplus of R$ 95 million.

This shows that the pressure is concentrated mainly at the federal level. The federal companies alone were responsible for the majority of the negative result, while state-level companies also added to the deficit. Municipal companies slightly improved the overall picture, but their surplus was too small to offset the larger losses at federal and state levels.

2026 Deficit Already Surpasses the Whole of 2025

The January-to-May deficit of R$ 7.4 billion is particularly significant because it has already crossed the full-year deficit recorded in 2025. In the whole of 2025, state-owned companies posted a deficit of R$ 5.9 billion. This means that the 2026 deficit surpassed last year’s total in less than half a year.

The comparison with the same period of 2025 also shows a sharp deterioration. From January to May 2025, state-owned companies had recorded a deficit of R$ 3.6 billion. The 2026 figure of R$ 7.4 billion is nearly double that amount, highlighting the weaker fiscal performance of state-owned firms this year.

Why the Primary Deficit Matters

A primary deficit means that expenses exceeded revenues before interest payments are considered. In simple terms, the companies spent more than they generated from their activities, excluding interest-related costs. For state-owned companies, such deficits matter because they can increase pressure on public finances.

If a state-owned company consistently records losses or needs funding support, the government may eventually need to help cover the gap. This can happen through capital injections, subsidies, loans, or other forms of financial assistance. In broader fiscal terms, weak performance by state-owned firms can add pressure to public debt and fiscal planning.

Petrobras Is Excluded from the Calculation

One of the most important details in the Central Bank methodology is that the figures do not include Petrobras’ result. Petrobras is one of Brazil’s largest state-controlled companies, but it is treated differently in this calculation because of its specific corporate structure and market-based operations.

According to the explanation reported from the Central Bank methodology, Petrobras follows corporate governance rules similar to those applied to privately traded companies. It also has autonomy to raise funds in domestic and international markets. Because of these characteristics, Petrobras is excluded from the Central Bank’s calculation of the state-owned companies’ fiscal result.

This exclusion is important for readers to understand. The reported deficit does not represent the financial performance of every government-controlled company in Brazil. Instead, it reflects the specific group of state-owned companies included under the Central Bank’s fiscal methodology.

May Surplus Gives Limited Relief

The May result showed a surplus of around R$ 273 million, or roughly R$ 0.3 billion, indicating that state-owned companies managed to record a positive monthly result after four months of deficit. However, the improvement was limited because the accumulated deficit from January to April was already very large.

In other words, May’s surplus helped reduce the pace of deterioration, but it did not change the overall picture. The year-to-date balance remained deeply negative, and the accumulated deficit continued to exceed both the same period of 2025 and the full-year 2025 result.

Broader Fiscal Context in Brazil

The deficit of state-owned companies comes at a time when Brazil’s overall public accounts are also under pressure. The Central Bank’s fiscal report showed that the consolidated public sector recorded a primary deficit of R$ 56.1 billion in May 2026, compared with a deficit of R$ 33.7 billion in May 2025. In that same month, the Central Government and regional governments posted deficits, while state-owned companies recorded a small surplus.

The report also showed that Brazil’s consolidated public sector accumulated a 12-month primary deficit of R$ 149 billion, equivalent to 1.14% of GDP. This broader number includes the Central Government, regional governments and state-owned companies. It indicates that the pressure is not limited to state-owned companies alone but is part of a wider fiscal challenge.

Interest Payments Add More Pressure

Another major concern is the cost of interest payments. The Central Bank reported that nominal interest payments of the consolidated public sector reached R$ 107.5 billion in May 2026, compared with R$ 92.1 billion in May 2025. Over 12 months, nominal interest payments reached around R$ 1.111 trillion, equal to 8.48% of GDP.

This is important because the primary deficit does not include interest payments. When interest costs are added, the fiscal picture becomes even more challenging. The Central Bank reported that the nominal deficit of the consolidated public sector reached R$ 163.7 billion in May, while the 12-month nominal deficit reached R$ 1.260 trillion, or 9.62% of GDP.

Debt Indicators Also Worsen

Brazil’s debt indicators also moved upward in May. The Central Bank data showed that the gross debt of the general government reached 81.1% of GDP, up from 80.2% in April. Reuters reported that the rise was mainly linked to higher interest costs, which increased the government’s borrowing burden.

Higher debt and interest payments can limit the government’s ability to spend on public services, investment and social programs. They can also increase concerns among investors about fiscal discipline, especially if deficits continue to rise.

Key Takeaway

The main message from the data is clear: Brazil’s state-owned companies have entered 2026 with a much weaker fiscal position than last year. A deficit of R$ 7.4 billion by May means the sector has already surpassed the full-year deficit of 2025. The result was mainly driven by January’s large deficit, while federal state-owned companies accounted for the biggest share of the negative balance.

Although May brought a small surplus, it was not enough to reverse the accumulated losses. The exclusion of Petrobras from the calculation is also an important methodological point, as it means the figure does not include the performance of one of Brazil’s largest state-controlled companies.

For policymakers, the numbers raise questions about the financial management, investment capacity and fiscal impact of state-owned firms. For the public, the issue matters because persistent deficits in state-owned companies can eventually affect the broader public accounts, debt levels and the government’s ability to fund key priorities.