Developed economies currently appear to be the hardest hit by the upward trend in government bond yields, driven by rising inflation and growing concerns about public debt levels. But the five BRICS countries (Brazil, Russia, India, China, and South Africa) are also affected by this trend, to varying degrees, depending on their debt levels, budget balances, debt maturities, and growth prospects.
Public debt has risen in all five countries since 2019, and all of them—with the exception of Russia—are projected to have debt exceeding 75% of GDP by 2026. The sources of vulnerability differ, however: large primary deficits in China; a heavy interest burden in Brazil; an unfavorable interest rate-growth differential in South Africa despite a return to primary surpluses; deteriorating fiscal balances in Russia; and a more favorable but growth-dependent situation in India.
The IMF’s extended projections through 2040 confirm the persistence of these structural trends. Debt continues to rise in four of the five countries: China’s debt is projected to reach 137% of GDP, Russia’s is expected to more than double to 44%, while Brazil’s and South Africa’s would stabilize at around 106% and 84% of GDP, respectively. India is the only country where debt is projected to decline, reaching 68% of GDP in 2040, driven primarily by strong growth rather than primary surpluses.
A sustained 200-basis-point increase in the implied interest rate would lead to higher debt-to-GDP ratios in all five countries. Brazil and China would be the hardest hit, with debt-to-GDP ratios approximately 28 and 27 percentage points higher than in the baseline scenario by 2040, due, respectively, to a heavy interest burden and a large outstanding debt stock, while South Africa’s debt would exceed 100% of GDP. If growth were to decline by an additional 0.5 percentage points, India’s debt would stop declining and would stand slightly above its 2026 level, demonstrating that its favorable trajectory depends on sustained growth.
