Congress Approves 2026 Budget Guidelines, Requiring 65% of Earmarks Paid by Midyear

Overview

• In a joint session, Congress passed the 2026 LDO after a five‑month delay and sent it for presidential sanction, clearing the way to vote the annual budget by mid‑December.
• The law obliges the Executive to pay at least 65% of mandatory individual and bancada amendments and special transfers to health and social assistance by the end of the first semester of 2026.
• The text sets a central government primary surplus target of about R$34.3 billion (0.25% of GDP) and authorizes using the lower bound of the fiscal band to guide contingency decisions.
• Up to R$10 billion in expenses by state‑controlled companies are excluded from the estatais primary result to accommodate Correios’ restructuring, and the usual clause making the central government offset estatais overruns was removed.
• Party and electoral funds are shielded from contingencies and the Fundo Partidário will be corrected from a 2016 base under the fiscal framework, while administrative changes set minimum values for “PIX” amendments and shorten analysis deadlines.