Brazil’s government proposed a 2027 federal budget with a primary surplus of R$18.6 billion (roughly USD 3.4 billion at recent rates), equivalent to 0.13% of gross domestic product. The proposal, presented on August 31, would cover the first year of the next presidential term.
The primary balance measures government revenue minus spending before interest payments on public debt. The projection comes as Brazil prepares to begin implementing its consumption-tax reform and faces pressure to improve the trajectory of public debt, which recently reached its highest level in five years.
Revenue and Spending
Net government revenue is expected to reach R$2.85 trillion in 2027, or 19.27% of GDP, compared with an estimated R$2.6 trillion this year. Total spending is projected at R$2.83 trillion. Expenditures will remain subject to Brazil’s fiscal framework, although several statutory exceptions allow some spending outside the framework’s main limits.
The official fiscal target is a surplus of 0.5% of GDP, or R$73.2 billion. Before the exceptions are applied, the government estimates a positive balance of R$83.4 billion. The exemptions would reduce that figure by R$64.7 billion, leaving the projected effective surplus of R$18.6 billion.
The budget also includes a margin equivalent to 0.25 percentage point of GDP, or R$37 billion, to absorb unexpected developments. In practice, the final result could still reach a deficit of up to R$28.5 billion while remaining within the permitted range.
Planning and Budget Minister Bruno Moretti said the government believes it can deliver the full fiscal target. Moretti and Finance Minister Dario Durigan have said the administration’s goal, if President Luiz Inácio Lula da Silva is re-elected, will be to reach the midpoint of the target rather than settle for its lower bound.
Spending Controls
The government plans to strengthen its ability to freeze discretionary spending if revenue falls short. Unlike a block imposed to accommodate higher mandatory expenses, a contingency freeze can reduce total government spending.
Fiscal-framework mechanisms are expected to generate about R$17.9 billion in savings. Roughly R$9 billion would come from limiting the real growth of personnel expenses to 0.6% above inflation, following a deficit recorded in 2025. Another R$8.9 billion would result from mechanisms recently approved by Congress and signed into law by Lula.
One measure limits the growth of spending financed by earmarked revenue. Another excludes revenue from the sale of federally owned oil from the calculation of net current revenue, reducing the mandatory health-spending floor by about R$7 billion from the initial projection. The government nonetheless expects health spending to rise by R$25 billion.
Mandatory expenses are projected to increase by R$145.1 billion, consuming most of the R$183.8 billion in additional room created by the fiscal framework. Pension benefits would rise by R$87.5 billion to R$1.17 trillion. Personnel spending would reach R$440.7 billion, while the Continuous Benefit Payment program for low-income elderly people and people with disabilities would rise to R$145.1 billion.
The proposal sets aside R$157.1 billion for Bolsa Família, Brazil’s main cash-transfer program, and R$44.8 billion for congressional earmarks. Based on single-source reporting from Folha de S.Paulo, the projected surplus would be the federal government’s strongest result since 2022 if delivered.