President Luiz Inácio Lula da Silva has sanctioned the Law of Budgetary Guidelines (LDO) for 2026 but vetoed a provision that would have raised the Fundo Partidário (Party Fund). The sanction was published in an extra edition of the Official Gazette and follows the measure’s approval by the National Congress in December.
The LDO establishes priorities and rules to guide preparation of the 2026 Annual Budget (LOA). While the LOA itself has yet to be sanctioned, the guidelines now set a firm timetable for the payment of mandatory parliamentary amendments, signalling a clearer path for how legislators’ earmarks will be executed next year.
Brazil budget 2026 overview
The vetoed clause concerned a change in the method used to correct the value of the Party Fund. The amendment proposed by Congress would have adjusted corrections according to the new fiscal framework, allowing an annual real increase of up to 2.5% on top of inflation. Legislative specialists estimated the change would cost roughly R$160 million.
Government sources said the increase would be contrary to the public interest because it would reduce funds available to the Electoral Justice for other obligations. The presidential office also argued the proposal contained a constitutional flaw: tying the Party Fund’s growth to real revenue gains from previous years could push those expenses higher than the limits set for primary expenditure growth.
Although President Lula vetoed the provision, the final decision rests with Congress. To overturn the veto and restore the original text, proponents must secure 257 votes in the Chamber of Deputies and 41 in the Senate.
The president did, however, maintain a key concession to legislators: a payment calendar for a portion of the mandatory parliamentary amendments. Under the sanctioned LDO, 65% of individual and bloc amendments classified as mandatory must be paid by the end of July. This includes direct special transfers known as “emendas Pix”, as well as individual and bloc amendments destined for health and social assistance funds.
A timetable for reimbursements has been a long-standing demand of parliamentarians. Previous attempts to insert such schedules into the LDO were blocked or vetoed by the executive. After negotiations this year, the government agreed to the calendar, a move likely to ease tensions between the executive and the legislature over budget execution.
Other numbers to note: the LOA project approved at the close of Congress’s 2025 session foresees a primary surplus of R$34.5 billion and allocates R$61 billion for parliamentary amendments. Those figures will be finalised when the Annual Budget is sanctioned and the government publishes the full text.
By balancing a veto on discretionary party funding with a concession on payment timing, the executive signalled fiscal caution while recognising the political need for predictability in transfers to constituencies and programmes. The coming weeks will show whether Congress accepts the veto or restores the proposed increase, a choice that will influence both budgetary headroom and electoral funding in the run-up to 2026.
Key Takeaways:
- The president sanctioned the 2026 Budget Guidelines Law while vetoing a provision that would have increased the Party Fund.
- The veto was justified on fiscal and constitutional grounds and could be overturned by Congress.
- The law sets a payment calendar for mandatory parliamentary amendments, requiring 65% to be paid by July.
- Projected figures in the pending Annual Budget include a R$34.5bn surplus and R$61bn for parliamentary amendments.
