Lula Signs 2026 Budget, Vetoes About R$400 Million in Earmarks, Sets Up R$11.5 Billion Freeze

Overview

• He vetoed R$393.8 million across 24 items inserted by lawmakers, chiefly in health (about R$382 million), including funds for hospitals, health posts, irrigation in the Northeast, and a federal university in Piauí.
• The government says roughly R$7–7.7 billion will be reprogrammed to original social priorities such as Pé-de-Meia, Gás do Povo, Mais Médicos, Farmácia Popular, and federal universities, with about R$3.3 billion kept frozen to meet fiscal rules.
• The Planalto argues the vetoed items violated Complementary Law 210/2024 by specifying local destinations within generic budget rubrics, aligning with recent STF guidance on transparency and limits to earmarks.
• Casa Civil signaled that up to R$11–11.5 billion lawmakers sought to treat as earmarks will remain subject to blocking later in the year under the fiscal framework’s execution rules.
• Congressional leaders from multiple parties vowed to pursue a veto override, while the sanctioned R$6.54 trillion budget effectively preserves about R$50 billion for earmarks, sets a R$34.2 billion primary surplus target, and raises the minimum wage to R$1,621.