Brazil's gross debt tops forecasts as interest burden mounts in May

BRASILIA, June 30 (Reuters) - Brazil's gross debt rose more than expected in May, central bank data showed on Tuesday, as the country's rising interest bill pushed borrowing higher. Debt reached 81.1% of gross domestic product, up from 80.2% in April and above the 80.7% forecast in a Reuters poll. By the International Monetary Fund's (IMF) metric - which includes all Treasury securities, unlike the central bank's measure that excludes those held off-market on its balance sheet - gross debt climbed to 94.3% of GDP, from 92.9% the previous month. Brazil's debt level remains well above the IMF's projected 77.2% average for emerging and developing economies in 2026, a gap that keeps risk premiums elevated as investors demand compensation to finance growing government spending amid concerns about fiscal discipline. Nominal interest payments totaled 107.547 billion reais ($20.7 billion) in May, lifting the 12-month interest bill to 8.48% of GDP, the highest since February 2016, when Brazil was facing a severe economic recession. The public sector posted a primary deficit of 56.131 billion reais for the month, wider than the 53.5 billion reais expected in the Reuters poll, taking the 12-month shortfall to 1.14% of GDP. Combined with the interest burden, Brazil's public sector posted a nominal deficit of 9.62% of GDP in the 12 months through May.

($1 = 5.1865 reais) (Reporting by Marcela Ayres; Editing by Andrew Heavens and Emelia Sithole-Matarise)