The 2026 Budget Guidance Bill (PLDO), which defines the criteria for executing the Union budget, is a typical element of an election year, which envisages demands from the legislative and executive branches, which, in theory, are on a collision course. The plan, approved on Thursday by the Joint Budget Committee (CMO), expands the possibility of spending outside the budget target, thus helping the government achieve an outcome that reaches at least its floor, that of a zero deficit. This also allows the floor to be considered for the purposes of achieving tax objectives. In exchange for these concessions, Parliament got something that the Executive had been reluctant to do for the past three years, but has now abandoned before the elections: approve a timetable for the publication of parliamentary amendments.
Give and take between powers does not constitute a market in which consumers and voters win. The imposition of parliamentary amendments benefited party leaders and incumbent parliamentarians, who were free to manage large volumes of resources to enhance their prestige among the electoral bases. The results of the 2024 municipal elections, with a high percentage of renewed incumbents, have reinforced the trend of low political renewal, a phenomenon that is expected to be repeated with the same force in federal representation in the House and Senate.
Parliamentarians tried and succeeded in resolving the question of how the 50 billion reais in amendments allocated in the PLDO 2026 will be paid during an election year. The government controls, for better or worse, their release, and much of the bitterness between congressional leaders and the Executive is due to the delay in the delivery of resources — as of June, only 27 percent of the 33 billion reais in tax amendments had been paid (O Globo, 5/12). First, the government agreed to an early release schedule. Subsequently, he agreed that this payment would cover 65% of the individual and bench amendments, or R$26.5 billion of the R$40.8 billion that will be allocated to the electoral corrals of deputies and senators.
The parties obtained other resources in addition to these. The correction of the party fund was approved, in accordance with the rules of the tax system, namely the adjustment of the real ceiling by 2.5%, since 2016, the year considered as the base. According to the calculations of the rapporteur Gervásio Maia (PSB-PB), opposed to the change, there will be between 160 and 200 million BRL more, without counting the Electoral Fund, which had 5 billion BRL each during the last two elections, which seems to have become the floor of these resources.
Another maneuver opened a huge hole in the “electoral defense,” a rule that prohibits governments from donating property, values and benefits in the three months before elections. This allows the distribution of basic food baskets, equipment, etc., made with the resources of the Executive or parliamentary amendments during the electoral period, which is very similar to the buying of votes, which the ban, which appears in the electoral law, sought to curb. The change strengthens local powers to attract votes from candidates to power and makes it difficult to renew leadership.
Planalto, for its part, obtained in exchange more resources to spend without legal obstacles. As the government faced large losses at Correios, the Joint Budget Commission authorized a 10 billion reais expenditure at the company to be deducted from the budget target and spending cap. In 2024, Congress had already authorized the deduction of up to 5 billion reais from public company expenditures made under the Growth Acceleration Program (PAC).
Furthermore, Senator Dorinha Rezende (União Brasil-TO), rapporteur of the PLOA 2026 Revenue, gave her opinion including an increase of R$14 billion in the import tax in the expected revenues, which will free additional expenses of R$13.2 billion. Resources will come from tax increases designed to protect domestic industry, with steel, chemicals and electric cars likely candidates.
The government also got what it already had: permission to pursue the bottom, not the middle, of the budget target. The legislation that established the new regime made this clear, but the Federal Court of Auditors (TCU) understood differently: only with an explicit mention in the PLDO could the Union use this parameter. The Joint Budget Committee gave its approval.
Before this week’s new spending exceptions, Prisma Fiscal, based on private budget deficit projections, estimated a deficit of R$73.1 billion in 2026, higher than the R$68 billion in 2025. The budget target is a surplus of R$34.3 billion. Budget agreements with the National Congress will not change the government’s minority position, in this government or in a new Lula government, and will only worsen the budget situation.
Despite their differences, the Executive and the Legislature are partners in responsibility for the continued deterioration of public accounts.
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