Brazil’s proposed 2027 budget reduces the share of mandatory spending to 91.7% of total expenditures, down from the 92.4% projected for 2026. The mandatory expenses total R$2.563 trillion (roughly USD 475 billion at recent exchange rates), equivalent to 17.3% of gross domestic product.
The proportion improves from the previous year, but the total is higher than the government’s earlier projection. In the budget guidelines bill submitted in April, mandatory spending was estimated at R$2.486 trillion, or 16.97% of GDP.
The figures come from single-source reporting by O Globo.
Less Discretionary Room
Discretionary spending—funds the government can allocate more freely—is projected at R$266.8 billion (roughly USD 49 billion), or 1.80% of GDP. That is below the R$274.7 billion, or 1.88% of GDP, included in the April guidelines proposal.
The distinction is central to Brazil’s budget debate. Mandatory expenses include commitments such as pensions, salaries and legally protected programs. Discretionary funds cover items that can be reduced or reshaped more easily, including parts of public investment and the day-to-day operation of government services.
As mandatory costs absorb most of the budget, the federal government has less room to respond to new priorities or cut spending without changing laws or constitutional rules.
Government’s Fiscal Target
Planning Minister Bruno Moretti acknowledged that the composition of spending has improved but said the level remains uncomfortable. He described the reversal in the growth trend of mandatory expenses as a significant effort, while noting that the government had not completed the task of restructuring its spending.
“Naturally, this is not a percentage that gives us the feeling that all the work has been done, but it is a considerable effort to reverse this curve of growth in mandatory spending,” Moretti said, according to O Globo.
The government projects an effective primary surplus of R$18.6 billion (roughly USD 3.4 billion) in 2027. A primary surplus measures government revenue minus expenditures before interest payments on public debt.
That projection is below the formal target of 0.50% of GDP, equivalent to R$73.2 billion (roughly USD 13.6 billion). The target allows a tolerance range from 0.25% to 0.75% of GDP.
Accounting Adjustments
For the purpose of determining compliance with the target, however, the government projects a surplus of R$83.4 billion. The calculation excludes R$64.7 billion in deductions, including part of the payments known as precatórios—court-ordered government debts.
The R$18.6 billion figure reflects the government’s overall accounts, including expenses that can be excluded under the rules used to assess the fiscal target. The two figures therefore measure different versions of the same projected result: the effective surplus and the adjusted surplus used for target compliance.