The fiscal results for the states in Brazil for 2025 reveal a significant downturn, marking the poorest performance since the fiscal crisis began in 2014. This decline is characterized by salary delays, debt restructuring, and increasing requests for support from the National Treasury. The primary surplus of the states has nearly disappeared, recorded at just 0.04% of the Gross Domestic Product, largely due to sluggish revenue growth and expenses outpacing inflation.

Total revenues showed a modest increase of 3.4% compared to inflation variations; however, the ICMS, which is the primary source of state revenue, only grew by 2.4%. As economic activity slows, it is anticipated that revenue collection will continue to be adversely affected. Conversely, total expenditures increased by 5.7% above inflation, with personnel spending — representing nearly half of the total expenses — rising by 3.2%. The pressure on state finances suggests a potential worsening of budgetary situations in the near future.

Despite this grim fiscal outlook, there was a notable increase in investments of 11%, reflecting some effort to stimulate economic growth amid ongoing budget constraints. However, the sustainability of these investments remains uncertain in light of falling revenues and increasing expenditures. Without significant reforms or economic improvements, the states may find themselves facing severe financial difficulties, complicating their ability to deliver essential services to the populace.