On Thursday (4/12), the National Congress approved the 2026 Budget Guidelines (LDO) draft. The opinion, which requires the government of President Luiz Inacio Lula da Silva to pay for most of the amendments by the middle of the election year, received a symbolic vote.
As decided, the government will have to pay 65% of the mandatory adjustments in the first half of the year, that is, by July. This equates to approximately R$13 billion. Mandatory adjustments are individual adjustments, bench adjustments and pecs.
The LDO is a set of guidelines and rules that dictate how the federal government spends the following year’s budget. The proposal is sent by the Palacio do Planalto, usually, in the first quarter of the year preceding the project, and must be voted on by the Mixed Budget Commission (CMO), and later by the National Congress.
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Conditional closure.
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Senate President, Davy Alcolombre (União Brasil-AP)
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Senate President, Davy Alcolombre (União Brasil-AP)
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Senators in session in Congress
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President of the Senate, Davy Alcolombre (União Brasil-RR), and Senator Randolph Rodriguez (PT-AP)
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President of the Senate, Davy Alcolombre (União Brasil-RR), and Senator Randolph Rodriguez (PT-AP)
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The general session of the House of Representatives during the National Conference session
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The report of Federal Representative Gervasio Maia (PSB-PB) set a timetable for the implementation of 65% of tax resources (those that Palacio do Planalto is obligated to pay) indicated by parliamentarians until July 2026. This applies to individual amendments and amendments from state benches. The committee’s amendments were excluded by agreement.
The agenda was one of the main points of contention between the government and Congress and led to the vote being postponed for nearly five months. Maya’s report was approved by the Mixed Budget Committee (CMO) on Wednesday (3/12) before reaching the plenary session.
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At the same time, the rapporteur eased the pressure on the government and decided that Planalto would be able to follow the minimum fiscal target in 2026, without having to follow the position. This would be a way to avoid major emergencies. The fiscal target for next year is to achieve a surplus of 0.25% of GDP, or about R$34 billion, with a range of 0.25% up or down, meaning the lower bound is zero deficit.
In committee, parliamentarians also agreed to allocate an amount that would allow the party’s fund to increase in an election year. The light specifies that the fund must grow retrospectively from the value set out in the 2016 budget, corrected through the broad national consumer price index (IPCA) by up to 2.5% per year. This decision swells the resources allocated to the party groups by more than R$160 million, in addition to the nearly R$5 billion already expected.
In the plenary session, four salient points were presented, but, also by agreement, two of them were removed and one was included – presented by the Congress Party and the Conference of Participants. This specifies that the government is prohibited from creating new mandatory expenditures, funds to finance public policies and from expanding tax expenditures in the coming year. This does not apply to cases of general disasters.
The Collective Management Office on Wednesday (12/4) approved the preliminary report on the draft 2026 Annual Budget Law (PLOA). The League is expected to vote next week on the sectoral reports, and later on the final report of Esnaldo Bolhuis (MDB-AL). Congress President, Senator Davy Alcolombre (Uniao Brasil-AP), is expected to hold a new joint session to vote on the letter of supply next week.
Veto
Parliamentarians also analyzed five of Lula’s objections. Among these laws, parliamentarians dropped a veto on the requirement for toxicity testing for those seeking licenses in categories A (motorcycles) and B (passenger cars). In practice, testing will be mandatory for drivers.
Lula vetoed a law granting Embrapa (the Brazilian agricultural research company) an exemption from paying fees and subscriptions. These fees are imposed by regulatory bodies when a company requires registration and protection of its experiments, products and technologies. But Congress overturned this veto.
Parliamentarians maintained Lula’s actions. Among them, the veto on the article requiring the submission of a moderate or severe disability certificate for the granting of Continuing Payment Benefit (BPC) was maintained. This rule was part of the government spending reduction package announced in 2024, but Lula decided to object to it after the negative repercussions.