Senate Approves Text-Base of Lula’s Fiscal Adjustment Package

Overview

• The Federal Senate approved the text-base of PLP 299/2026 on Thursday, Nov. 12, by 45 votes to 31 after an earlier 40–38 vote to fast-track consideration.
• Key provisions kept in the text include a 10% linear cut to tax benefits, a cap that limits real growth of primary spending to 2% in years when containment is activated, and tighter limits on tax-credit compensations.
• Senators left several parliamentary amendments (destaques) for separate votes scheduled for Nov. 17 and must finish Senate changes before the bill goes to the Chamber of Deputies and is folded into the 2027 budget process.
• Separately the Senate approved a law protecting Fust telecom fund resources and extended the Fust Direto investment incentive to December 2031, at an estimated fiscal renunciation of R$465.6 million per year.
• The government says the package will yield R$50–60 billion in 2027 and argues it will shore up fiscal credibility, while analysts and opposition senators warn the measures are limited, focused on 2027 only, and could shift costs onto states and affected sectors such as export compensation and targeted tax incentives.