The approval of the Budget Orientation Law (LDO) for 2026 reveals a pact of electoral convenience between the Executive and the Legislative, which gives priority to immediate interests in an electoral year to the detriment of containing the escalation of public debt.
On the side of the government of Luiz Inácio Lula da Silva (PT), the blessing was the authorization to calculate the reserve of resources based on the floor of the budgetary target (zero result, not counting interest and excluded expenses), and not on the center (surplus equivalent to 0.25% of gross domestic product, or 34 billion reais).
In return, the National Congress imposed a timetable for the publication of the mandatory amendments: 65% of them must be paid by the end of the first half of 2026. Thus, parliamentarians will be guaranteed R$26.5 billion out of the R$40.8 billion budgeted to allocate to their electoral corrals.
The situation worsens when we consider the numerous exceptions that allow spending to be subtracted from the calculation of the official target, a practice that undermines the already fragile credibility of the so-called budgetary framework.
In practice, it is estimated that between 2023 and 2026 the government will have spent 170 billion reais outside the approved limits, according to an investigation by the newspaper O Globo. For next year, around 88 billion reais in deductions are planned, an 80% jump from 48.7 billion reais in 2025.
The bill includes 10 billion reais to support the collapse of the Correios at taxpayer expense, 5 billion reais for the armed forces, 4.2 billion reais for public enterprise investments in the Growth Acceleration Program (PAC) and a potential 2 billion reais for health and education through the Social Fund.
In terms of revenue, another 14 billion reais is shown with import taxes, which can include steel, chemicals and automobiles. This item, like other fictitious earnings projections in recent years, seems more like a resource for avoiding immediate contingencies than an actual estimate.
Taking into account these margins of maneuver, the actual result in 2026 should again be a deficit, of the order of 70 billion reais, according to experts.
With the demoralization of limits, no one anymore considers the primary goal as a relevant criterion. Attention is focused on a point where it is not possible to hide the lack of control: the accelerated growth of gross debt, which approaches 80% of GDP in the projections for 2026.
In an election year, no progress is expected. But the budget hole will require action by whatever the next administration is.
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