Brazil’s federal state-owned companies are showing broad signs of financial deterioration, according to a new report by the Independent Fiscal Institution (IFI), an analytical body linked to Brazil’s Senate. The report identified negative equity, deficits in operating cash flow and negative operating margins at several companies controlled by the federal government.
The assessment is based on financial data dating back to 2018. Alexandre Andrade, an IFI director, told CNN Brasil’s CNN Money that the deterioration appears across multiple indicators, although the causes differ from one company to another.
“There are a number of indicators showing the financial deterioration of state-owned companies in recent years,” Andrade said, according to CNN Brasil.
Because the problems vary, Andrade said each company requires an individual assessment before the government chooses a restructuring plan or financial support.
Risk to Public Finances
The deterioration could become a direct risk to Brazil’s public accounts. If the companies cannot finance their operations, the federal government may have to provide additional capital or guarantees. That would increase Union spending at a time of tight budget constraints and difficulty meeting fiscal targets.
Andrade ruled out the possibility that one of the companies would simply go bankrupt. He said that scenario does not apply in practice to public companies because the state has mechanisms to keep them operating.
That does not eliminate the cost to taxpayers. The government can preserve a company’s operations through loans, capital injections or other forms of support, but those measures can transfer the financial burden to the federal budget.
Correios Under Pressure
Brazil’s postal service, Correios, is among the clearest examples cited by the IFI. The company received a government-backed loan of R$12 billion (approximately US$2.1 billion at recent exchange rates) last year. Under the loan agreement, it is expected to require a further R$6 billion to R$7 billion (about US$1.1 billion to US$1.2 billion) in 2027.
According to Andrade, Correios’ gross revenue fell by roughly R$2 billion between 2022 and 2025. The decline followed a 65% to 70% drop in the volume of postal shipments, a movement he associated with the so-called “blusinhas tax,” Brazil’s import tax on certain low-value international purchases.
At the same time, the company faced a sharp increase in expenses. Its balance sheet recognized between R$2 billion and R$3 billion (roughly US$350 million to US$530 million) in court-ordered debts related to labor claims and health insurance plans.
The combination of lower revenue and higher short-term costs has squeezed the company’s cash position, Andrade said.
Infraero’s Business Model
Infraero, the federal airport operator, faces a different problem. Its revenue has declined as airports were transferred to private concessionaires, reducing the company’s role in airport administration.
The company is also adapting to regulatory changes and a new business model. The IFI’s assessment therefore points to a broader challenge: while financial deterioration is visible across several state-owned companies, the causes and possible solutions must be evaluated individually.
This article is based on single-source reporting from CNN Brasil.