President Luiz Inácio Lula da Silva signed the federal budget for 2026 into law with 26 vetoes, publishing the Law of Budgetary Guidelines (LDO) in an extra edition of the Official Gazette on 31 December. The sanctioned budget sets the Union’s total spending at roughly R$6.5 trillion and reaffirms the government’s commitment to the fiscal framework established by recent legislation.
What the Brazil 2026 budget means for public finances
The LDO makes clear that 28% of the combined fiscal and social security budgets will be allocated exclusively to interest on the public debt, equivalent to approximately R$1.82 trillion. The global spending limit for the Three Branches of government was set at about R$2.4 trillion.
For 2026 the budget projects a primary surplus of R$34.26 billion, with the possibility of reaching up to R$68.52 billion. Under the current fiscal framework the target will be met even in the event of a zero result. The legally set fiscal target allows a primary deficit of up to R$6.75 billion. Investment expenses for the Growth Acceleration Programme (Novo PAC) up to R$5 billion will not be counted against the primary deficit target.
The law also guarantees that the annual review of the minimum wage set in the budget will align with consumer inflation measured by the National Consumer Price Index (INPC) and the statutory valuation rule. As of 1 January 2026 the minimum wage is set at R$1,621.
Vetoes aimed at preserving fiscal limits and legal safeguards
Among the 26 vetoes, President Lula blocked a provision that would have increased the Party Fund, the mechanism that finances party activities and campaign spending. The presidential message argues the increase would reduce funds available to the Electoral Justice and would breach legal limits on primary government expenditures.
Other significant vetoes included a clause permitting payment of parliamentary amendments to projects lacking an environmental licence or engineering design. The government said such permits are prerequisites for project execution and that identifying technical or legal impediments early allows funds to be reallocated to viable initiatives.
The president also vetoed a proposal to revive unpaid amendments from 2019–2023 known as ‘restos a pagar’. The executive maintained that resources not released in that period would conflict with the validity deadlines for outstanding payables set by a 1986 decree.
The presidential dispatch lists a set of expenditures that should not be exempt from contingency measures, including agency oversight costs, animal health defence, programmes to support women in the energy transition and assistance for gifted education. The message defended the need for budgetary flexibility, warning that too many non‑contingenciable items would limit agencies’ ability to manage their expenses.
Parliamentary amendments and local impact
The law provides about R$61 billion in parliamentary amendments for projects in states and municipalities. Of this total roughly R$37.8 billion are mandatory impositive amendments. Individual amendments by deputies and senators amount to R$26.6 billion while state caucus amendments stand at R$11.2 billion. These allocations will shape investment and public works decisions across the country in 2026.
By signing the budget with targeted vetoes, the president has balanced competing pressures: upholding fiscal rules and legal safeguards while allowing room for parliamentary spending. The measures are likely to be welcomed by markets focused on fiscal discipline, but they also set the stage for political debate over how to finance local projects and party activities within the limits of the law.
Key Takeaways:
- President Luiz Inácio Lula da Silva sanctioned the Brazil 2026 budget with 26 vetoes, including a block on increasing the party fund.
- The Union budget totals about R$6.5 trillion; 28% of fiscal and social security spending will go to interest payments (around R$1.82 trillion).
- The budget targets a primary surplus with a fiscal framework that allows a small deficit, while preserving salary‑minimum adjustments tied to inflation.
- Parliamentary amendments total roughly R$61 billion; several vetoes aim to protect legal and technical safeguards, such as environmental licensing and limits on outstanding payments.
