The Devastating Fiscal Gap: A $300 Billion Swing

Let’s start with the numbers that don’t lie. According to *Revista Oeste*, Bolsonaro ended his term with a $54 billion surplus. Under the current Lula administration, the deficit has ballooned to $354 billion. That’s a jaw-dropping shift from +$54 billion to –$354 billion.

This isn’t a minor tweak or a technical glitch. It’s a complete reversal of fiscal health. One administration handed over balanced books with money left over; the next plunged the country into the biggest deficit on record.

Numbers That Scream Incompetence

To put it in perspective, swinging from a $54 billion surplus to a $354 billion deficit is an unprecedented fiscal meltdown. This isn’t a management slip-up—it’s a deliberate policy disaster.

When Lula’s team claims they “inherited a broken country,” the data says the exact opposite. The “cursed inheritance” story falls flat against Bolsonaro’s surplus.

State-Owned Companies: From Surplus to Record Losses

$8.83 Billion Loss in 12 Months

Central Bank data show federal state companies lost $8.83 billion in the year through July 2025—a 25% jump from the previous record of $6.73 billion the year before.

That’s the worst result since the series began in 2002. This isn’t a one-off crisis or a hand-me-down problem—it’s rapid deterioration under the current PT-led government.

The 2023 Reversal: When Everything Fell Apart

Look back at the track record. Under Temer in 2018, the companies posted a $3.47 billion surplus. 2019 hit a high of $10.29 billion. Bolsonaro’s final year, 2022, closed with $4.75 billion in the black.

Then 2023—Lula’s first year—flipped the script. A $656 million deficit appeared. Things only got worse, culminating in today’s $8.83 billion hole. The pattern is crystal clear: change the administration, watch the books collapse.

The Fake “Strategic Investment” Excuse

Esther Dweck’s Threadbare Defense

Management Minister Esther Dweck tries to spin the losses as “strategic investments,” claiming past funding set up projects that now need more cash.

Economists shred that argument in seconds. João Pedro Paes Leme of Tendências Consulting says: “Anyone who didn’t buy the government’s story saw this deficit coming.” Investments don’t explain a structural crater this size.

Real Structural Problems Ignored

Paes Leme points to the true culprits: “What we’re seeing are built-in issues with how these companies operate—they can’t compete in the real world.” Chronic defaults on pension payments are just one recurring mess.

Bottom line: it’s not about investment. It’s about bad management, zero competitiveness, and using state firms as political tools. The government’s excuse is a smokescreen for incompetence.

Political Cronyism and Misused Funds

State Firms as Political Machines

Public-accounts analyst Murilo Viana is blunt: “Investment quality in these companies has tanked because they’ve become vehicles for political agendas.” This isn’t conspiracy—it’s documented fact.

Take Codevasf (the São Francisco and Parnaíba Valley Development Company): lawmakers funnel pork-barrel funds through it. State firms have become pipelines for political payoffs.

The Cost of Cronyism

When public companies turn into jobs programs and deal-making hubs, efficiency vanishes. Competitiveness is sacrificed for party loyalty. Losses become routine and baked-in.

That $8.83 billion hole isn’t an accident—it’s the predictable outcome of treating state firms as political toys instead of real businesses.

Lack of Transparency: Hiding the Mess

Quarterly Report Vanishes

Up through 2022, the Federal State Companies Bulletin came out every quarter. In early 2023—Lula’s first year—it simply stopped. Oversight and tracking took a direct hit.

Paes Leme notes: “Since last year, when the deficit spiked, we’ve had no clue where the bleeding was coming from.” The government made transparency harder right when the losses started.

Late and Thin Data

A 2023 annual report finally dropped in July 2024, but the info was skimpy. FGV Ibre’s João Mario de França says: “There’s too little transparency to judge the quality of these projects.”

The opacity isn’t accidental—it’s a tactic to dodge scrutiny. When a government hides the numbers, it’s because there’s plenty to hide.

Correios: The Poster Child for Disaster

$4.37 Billion Loss in Six Months

The postal service accounts for most of the state-firm deficit. The first half of 2025 saw a $4.37 billion loss—more than triple the $1.35 billion lost in the same period of 2024.

Q2 2025 alone bled $2.64 billion—nearly five times the year-earlier $553.2 million. The decline is steep and accelerating.

A Perfect Storm of Incompetence

Correios packs every hallmark of PT mismanagement: blatant cronyism, bloated payrolls, and failure to adapt to market shifts.

The company blames the “Remessa Conforme” import rule and the so-called “blouse tax.” Any competent firm would adjust. The real issue is leadership that points fingers instead of fixing problems.

Risk of a Taxpayer Bailout

Things are so dire that Correios may need a Treasury infusion. Murilo Viana warns: “The company could require federal funds or lose its ‘non-dependent’ status.”

That means taxpayers could foot the bill for decades of mismanagement. PT incompetence doesn’t just wreck a state firm—it threatens to dump the tab on every Brazilian.

Emgepron: $10 Billion Sitting Idle

Cash Hoarded to Inflate Past Numbers

The Navy project management company (Emgepron) got $10 billion from the Treasury between 2017 and 2019 to build ships—then left the money untouched.

That artificially pumped up state-firm surpluses back then. Once projects (Tamandaré frigates, Almirante Saldanha ship) restarted, deficits returned. The naval investment strategy was flawed from day one.

Shipbuilding: A Foretold Collapse

Brazil’s shipbuilding sector already crashed under earlier PT governments after Petrobras cut orders post-Lava Jato. Doubling down on the same failed playbook shows zero learning curve.

Emgepron stands for everything wrong: poor planning, worse execution, no transparency, and a bill for taxpayers.

What Changed from Bolsonaro to Lula?

Cleanup vs. Cronyism

Under Temer and Bolsonaro, a cleanup program plugged old holes and built surpluses from 2018 to 2022.

In 2023, with PT back in charge, priorities flipped. Efficiency gave way to cronyism; competitiveness gave way to politics. Deficits exploded immediately.

Merit-Based vs. Ideology-Driven Management

Bolsonaro picked experienced technocrats. Lula reverted to party loyalty.

One team chased results; the other chased favors. The $300 billion swing isn’t random—it’s the direct result of opposite playbooks.

Privatization: The Obvious Fix the Government Ignores

Time to Rethink the State’s Role

Economists agree: we must ask which state firms actually need to exist. Paes Leme says: “We have to question whether their role truly belongs to the Brazilian state.”

Industrial state companies offer dubious public value. Keeping them just drains resources with no social payback.

Case-by-Case Review

João Mario de França calls for individual audits: “The worst performers clearly need a debate about whether they should stay public.”

This isn’t blind privatization. It’s rational triage: which firms justify the cost? Chronic money-losers with no social upside should be sold.

Ideological Roadblock

Lula’s government is ideologically allergic to privatization. It would rather prop up failing firms than admit the state is a lousy manager. Dogma trumps economics.

Until that changes, taxpayers keep bankrolling political pets.

Impact on the Overall Budget Picture

A $354 Billion Deficit Is Unsustainable

Lula’s $354 billion hole isn’t just a scary number—it threatens the nation’s debt sustainability. Every extra billion means higher interest payments.

It’s a vicious cycle: more debt → higher interest → less money for real investments. Today’s fiscal irresponsibility is tomorrow’s recession and job losses.

State Firms Make a Bad Situation Worse

The $8.83 billion state-firm loss piles onto an already dire picture. If the Treasury covers Correios and others, the hole deepens.

Murilo Viana warns: “Bailing them out would worsen an already dramatic fiscal outlook and raise doubts about debt sustainability.”

Mismanaged state firms aren’t an isolated headache—they’re a ticking fiscal time bomb.

International Comparison: Brazil Swimming Against the Tide

Serious Countries Sell Off Money-Losers

Developed nations don’t cling to failing state firms out of ideology. The UK, France, and even China have privatized companies that no longer made sense.

Brazil keeps bleeding cash on losers while the world moves toward efficiency.

Latin America Learned the Lesson

Chile privatized electricity and now boasts one of the region’s best energy grids. Peru sold telecoms and saw coverage and quality soar.

Brazil’s stubborn state-owned model isn’t just bad economics—it’s ideological stubbornness that keeps the country stuck in the past.

The Cost to You, the Taxpayer

Every Deficit Dollar Comes Out of Your Pocket

Never forget: state-firm losses are paid by you. Each billion means less for schools, hospitals, roads. Government incompetence steals money meant for the public.

That $8.83 billion could build thousands of schools or hospitals. Propping up failing firms chooses politics over people.

Higher Interest, Higher Inflation

Big deficits force the Central Bank to hike rates to fight inflation. Your loans get pricier, jobs get shakier.

Fiscal irresponsibility isn’t some abstract Brasília problem—it hits your wallet and your life.

Conclusion: Numbers Don’t Lie, PT Management Does

The data is devastating for the government’s story. *Revista Oeste* shows Bolsonaro left a $54 billion surplus; Lula delivered a $354 billion deficit—a $300 billion chasm that screams incompetence.

Federal state firms posted their worst loss ever: $8.83 billion. Under Temer and Bolsonaro: surpluses. Under Lula: record holes. Coincidence is impossible—it’s cause and effect.

The “strategic investment” excuse has been demolished by experts. What’s left is cronyism, mismanagement, and secrecy. State firms became jobs programs and slush funds.

The burning question: how long will taxpayers foot the bill for PT ideology that insists on propping up money-losing companies? How much longer will we pretend the problem is a “cursed inheritance” when the numbers prove otherwise?

What about you? Will you keep swallowing the spin, or finally face the facts? One thing is sure: every day of PT management is another day your taxes bleed out.

Want to keep exposing fiscal failure with hard data? Follow analyses built on numbers, not narratives. Math has no political bias—it just reveals inconvenient truth.