President Luiz Inácio Lula da Silva’s government has announced R$187.2 billion in direct benefits and economic measures in 2026, with about 94% of that amount outside the spending-growth limit created by Brazil’s 2023 fiscal framework, according to reports citing a study by economist Marcos Mendes.
Poder360 reported that R$176.7 billion of the package is outside the spending cap. GP1, citing the same study, put the share at 94.3%. The measures include credit programs, tax relief, fuel subsidies, housing measures and changes linked to workers’ severance funds.
What the Rules Exclude
Brazil’s fiscal framework, approved in 2023, replaced the stricter spending ceiling adopted under former President Michel Temer. The newer rule limits expenditure growth partly according to revenue performance and was presented as a way to stabilize public debt.
Mendes, an associate researcher at Insper and a former senior economic adviser at the Finance Ministry from 2016 to 2018, argues that the scale of exceptions weakens the rule. According to Poder360, he said the number of exclusions makes the primary surplus target lose meaning and contributes to chronic high deficits.
The study cited by both outlets says R$118.7 billion of the measures, or about 63% of the total package, is also outside the primary surplus target. That target measures whether the government collects more than it spends before interest payments on public debt.
GP1 reported that the 2026 fiscal goal is a primary surplus of 0.25% of gross domestic product, equivalent to R$34.3 billion, with a tolerance band that allows a neutral result.
The Measures
The programs and policies cited in the reports include Move Brasil, Move Aplicativos, Desenrola Brasil, Gás do Povo, an expansion of Minha Casa Minha Vida, diesel tax relief, a gasoline subsidy, a wider income-tax exemption for people earning up to R$5,000 per month, and more flexible access to the FGTS birthday-withdrawal option.
The mechanisms vary. Some involve loans through state-owned banks, with Treasury resources treated as financial operations rather than budget spending. Others use public funds as loan guarantees. Tax cuts reduce revenue rather than increase expenditure, which keeps them outside the spending-growth limit but still affects the broader fiscal balance. Extraordinary credits can also bypass the spending limit while remaining relevant to the fiscal result.
The common effect, according to the reports, is that the fiscal cost does not disappear. It appears through lower revenue, higher debt, or resources that can no longer be used for other purposes such as debt reduction.
Debt Pressure
Poder360 reported that Brazil’s gross public debt stands at 80.4% of GDP, with market analysts expecting it to reach 83% by the end of the year and 86.5% in 2027. The outlet also reported that the government had a primary deficit in 2025 while still meeting its target through exceptions.
GP1 noted that Brazil recorded a R$54.1 billion primary surplus in 2022, the final year of former President Jair Bolsonaro’s administration, according to National Treasury data.
The reports frame the package as part of a broader dispute over how much room Brazil’s fiscal rules leave for spending expansion in a politically sensitive year. Mendes told Poder360 that the framework is still better than having no rule, because it creates some instrument for controlling expenditure. His criticism is that broad exceptions reduce its credibility and make debt stabilization harder.