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Brazil's public finances: the budget cycle, the fiscal target, debt and the 2027 budget

Last verified: 2026-10-27 · Status: Changing

Brazil's federal budget runs on three laws the Executive must propose: a four year plan (PPA), annual budget guidelines (LDO) that set the primary balance target, and the annual budget (LOA). For 2026 the LOA estimates revenue and fixes spending at R$6.54 trillion, including R$1.82 trillion to roll over federal debt, and the LDO targets a Central Government primary surplus of R$34.3 billion with a tolerance band down to zero. In the 12 months to August 2026 the consolidated public sector ran a primary deficit of 0.62 percent of GDP and a nominal deficit of 9.48 percent, with gross general government debt at 82.9 percent of GDP, so interest costs, not primary spending, drive the debt path.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026. The rate moved from R$5.0377 on 23 October to R$5.5007 on 26 October 2026, so conversions are for orientation only.

Key facts

Central Government primary surplus target for 2026 (LDO)	34264603518 BRLLei nº 15.321, art. 2, as of 2025-12-31 · in force
Tolerance band around the primary target	0.25 percentage points of GDP, each sideLei Complementar nº 101, art. 4, § 5, IV, as of 2023-08-31 · in force
Federal budget 2026, total revenue and spending (incl. debt refinancing)	6542612741768 BRLLei nº 15.346, art. 1, as of 2026-01-14 · in force
Federal debt refinancing in the 2026 budget	1822972167477 BRLLei nº 15.346, art. 2, III, as of 2026-01-14 · in force
Consolidated public sector primary balance, 12 months	-0.62 % of GDPBanco Central do Brasil fiscal statistics press release of 30 September 2026, as of 2026-08-31 · in force
Consolidated public sector nominal balance, 12 months	-9.48 % of GDPBanco Central do Brasil fiscal statistics press release of 30 September 2026, as of 2026-08-31 · in force
Consolidated public sector nominal interest, 12 months	8.86 % of GDPBanco Central do Brasil fiscal statistics press release of 30 September 2026, as of 2026-08-31 · in force
Gross general government debt (DBGG)	82.9 % of GDPLei Complementar nº 200, art. 2, § 4 (measured by the Central Bank), as of 2026-08-31 · in force
Net public sector debt (DLSP)	69.3 % of GDPBanco Central do Brasil fiscal statistics, as of 2026-08-31 · in force
Personnel spending cap, Union	50 % of current net revenueLei Complementar nº 101, art. 19, I, as of 2000-05-04 · in force
Minimum federal investment in the budget	0.6 % of estimated GDPLei Complementar nº 200, art. 10, as of 2023-08-31 · in force

The rule

1. Laws proposed by the Executive set the multiyear plan (PPA), the budget guidelines (LDO) and the annual budgets (LOA). The LDO sets the targets and priorities of the federal administration and fiscal policy targets consistent with a sustainable debt path, and guides the LOA. The LOA comprises the fiscal budget, the investment budget of companies in which the Union holds a voting majority, and the social security budget, and it may not contain provisions unrelated to revenue estimates and spending authorisations. The Executive publishes a summary budget execution report within 30 days after each two month period.Constituição Federal de 1988, Art. 165, caput and §§ 1, 2, 3, 5 and 8, 1988-10-05 official text · verified 2026-10-27

2. Until the complementary law on public finance is passed, the LDO bill must reach Congress eight and a half months before the end of the fiscal year (by 15 April) and be returned for signature by the end of the first half of the legislative session (17 July); the LOA bill must reach Congress four months before year end (by 31 August) and be returned by the end of the legislative session (22 December). Congress may not start its mid year recess without approving the LDO bill.Constituição Federal de 1988, Ato das Disposições Constitucionais Transitórias (ADCT); Constituição art. 57, ADCT art. 35, § 2, II and III; Constituição art. 57, caput and § 2, 1988-10-05 official text · verified 2026-10-27 · changed: For 2027 the LDO bill (PLN 2/2026) was not voted by 17 July 2026 and the Executive filed the LOA bill (PLN 24/2026) on 31 August 2026 with the LDO still pending (Agência Senado, 31 August 2026).

3. Individual amendments by members of Congress to the budget bill are approved up to 2 percent of the prior year's current net revenue (RCL), half for public health; 1.55 percent goes to deputies and 0.45 percent to senators. Execution of these individual amendments, and of state caucus amendments up to 1 percent of RCL, is mandatory except for technical impediments, and may be cut in the same proportion as other discretionary spending if the fiscal target is at risk.Constituição Federal de 1988, Art. 166, §§ 9, 9-A, 11, 12, 13 and 18, 1988-10-05 official text · verified 2026-10-27

4. It is forbidden to start programs not included in the LOA, to incur spending above budget appropriations, and to borrow more than the amount of capital spending (the golden rule), unless Congress approves supplementary or special credits with a specific purpose by an absolute majority.Constituição Federal de 1988, Art. 167, I, II and III, 1988-10-05 official text · verified 2026-10-27

5. The LDO must include an Annex of Fiscal Targets with annual targets for revenue, spending, nominal and primary balances and public debt for the year and the following two. If, at the end of any two month period, revenue may not support the primary or nominal targets, each branch must cut commitments and payments within 30 days (contingenciamento); constitutional and legal obligations and debt service are exempt. The Finance Minister reports on the targets in a public hearing of the joint budget committee by the end of May, September and February. Personnel spending may not exceed 50 percent of current net revenue for the Union and 60 percent for states and municipalities, and credit operations between federative entities are prohibited.Lei Complementar nº 101 (Fiscal Responsibility Law, LRF), Art. 4, § 1; art. 9, caput, §§ 2 and 4; art. 19; art. 35, 2000-05-04 official text · verified 2026-10-27

6. The LDO sets the Central Government primary balance target for the budget year and the next three, compatible with stabilising gross general government debt (DBGG) as a share of GDP. The target is checked with a tolerance band of 0.25 percentage point of the GDP projected in the LDO bill on either side. If the result exceeds the upper limit, the Executive may raise appropriations by up to 70 percent of the excess, capped at 0.25 percent of the prior year's GDP, for investment. Investment in the budget bill and law may not be below 0.6 percent of estimated GDP. The Central Bank measures the primary result and the DBGG to GDP ratio.Lei Complementar nº 200 (sustainable fiscal regime); Lei Complementar nº 101, art. 4, § 5, IV (added by Lei Complementar nº 200), LC 200 art. 2, art. 9 and art. 10; LRF art. 4, § 5, IV, 2023-08-30 official text · verified 2026-10-27

7. The 2026 budget guidelines law requires the 2026 budget and its execution to be compatible with a Central Government primary surplus target of R$34,264,603,518. In execution the tolerance band runs from a primary result of R$0.00 (lower limit) to a surplus of R$68,529,207,037 (upper limit); exceeding the upper limit is not a breach. The projected primary result of states and municipalities serves as the reference for their borrowing limits and for Union guarantees.
Example: Primary surplus target R$34.26 billion; tolerance band R$0 to R$68.53 billion. / About US$6.42 billion; band US$0 to US$12.85 billion.Lei nº 15.321 (LDO 2026), Art. 2, caput and §§ 1 to 3, 2025-12-31 official text · verified 2026-10-27

8. The 2026 budget law estimates Union revenue at R$6,542,612,741,768 and fixes spending at the same amount. Within the fiscal and social security budgets (R$6,344,718,539,207), R$2,925,343,059,882 is fiscal budget revenue, R$1,596,403,311,848 social security budget revenue and R$1,822,972,167,477 debt refinancing through new federal securities. R$288,095,342,537 of fiscal revenue consists of credit operations that depend on Congress approving a supplementary credit bill by absolute majority, because of the golden rule.
Example: Total budget R$6.54 trillion, of which R$1.82 trillion debt rollover. / About US$1.23 trillion, of which about US$342 billion debt rollover.Lei nº 15.346 (LOA 2026), Art. 1 and art. 2, caput, I to III and sole paragraph, 2026-01-14 official text · verified 2026-10-27

9. The positive semiannual result of the Central Bank, after reserves, is owed to the Union and paid by the 10th business day after the balance sheet is approved, and must be used only to pay federal securities debt. The part of the result that comes from gains on FX reserves and FX derivatives goes to a result reserve instead of being paid to the Treasury.Lei nº 13.820, Art. 2 and art. 3, 2019-05-02 official text · verified 2026-10-27

10. The Federal Court of Accounts (TCU) assists Congress in external control: it gives a prior opinion on the President's annual accounts within 60 days and judges the accounts of anyone managing federal public money, including companies the federal government controls. The Senate sets global limits on consolidated debt of the Union, states and municipalities, rules on their internal and external credit operations and Union guarantees, and authorises external financial operations.Constituição Federal de 1988, Art. 71, I and II; art. 52, V to IX, 1988-10-05 official text · verified 2026-10-27

11. States with debts to the Union under the 1990s and later refinancing laws could join the Full Debt Payment Program (Propag). Debt may be paid down with cash, transfers of equity stakes in state owned companies (with specific federal and state laws), real estate, receivables and other instruments, and the balance is refinanced in up to 360 monthly installments indexed to IPCA, with real interest of 0 percent a year for states that cut the debt by at least 20 percent and meet investment conditions, rising for states that meet fewer conditions.Lei Complementar nº 212 (Propag), Art. 2, art. 3, art. 4 and art. 5, 2025-01-13 official text · verified 2026-10-27

Indicator	R$	US$ (approx.)	% of GDP
Primary balance, consolidated public sector	R$82.1 billion deficit	US$15.4 billion deficit	0.62% deficit
Nominal interest	R$1,182.2 billion	US$221.6 billion	8.86%
Nominal balance (primary plus interest)	R$1,264.2 billion deficit	US$237.0 billion deficit	9.48% deficit
Gross general government debt (DBGG), August 2026	R$11.1 trillion	US$2.08 trillion	82.9%
Net public sector debt (DLSP), August 2026	R$9.2 trillion	US$1.72 trillion	69.3%

Brazil public finance dashboard, 12 months to August 2026 (Banco Central do Brasil, press release of 30 September 2026). USD at PTAX R$5.3346 for orientation only.

Step	Deadline	Rule
LDO bill to Congress	15 April (eight and a half months before year end)	ADCT art. 35, § 2, II
LDO approved	17 July, end of first half of the session; no recess without it	ADCT art. 35, § 2, II; Constituição art. 57, § 2
LOA bill to Congress	31 August (four months before year end)	ADCT art. 35, § 2, III
LOA approved	22 December, end of the legislative session	ADCT art. 35, § 2, III; Constituição art. 57
Bimonthly revenue review and possible spending freeze	Within 30 days after each two month period	LRF art. 9
Fiscal target hearings in Congress	End of May, September and February	LRF art. 9, § 4

The federal budget calendar

Item	Value in the bill
Primary surplus (all primary revenue and spending)	R$18.6 billion, a little over 0.1% of GDP
Minimum wage proposed for 2027	R$1,741 (from R$1,621)
GDP growth assumption	2.46%
Inflation assumption	3.6%
Selic assumption	12.53%
Average exchange rate assumption	R$5.22 per US dollar

2027 budget bill (PLN 24/2026) as filed on 31 August 2026 (Agência Senado). Pending in Congress; figures can change.

Worked example

Reading the 2026 target. The LDO target is a Central Government primary surplus of R$34.26 billion (about US$6.42 billion), but the lower limit of the band is a zero result. A year that ends with a primary result of R$0 still complies with the target (Lei nº 15.321 art. 2, § 1, II); it does not mean the government ran a surplus.
Why debt rises with a small primary deficit. In the 12 months to August 2026 the primary deficit was R$82.1 billion (0.62 percent of GDP) but interest added R$1,182.2 billion (8.86 percent of GDP), so the nominal deficit reached R$1,264.2 billion (9.48 percent of GDP, about US$237 billion). The DBGG rose 4.2 points of GDP in 2026 to August, of which 6.5 points came from interest.
Budget size against the economy. The 2026 LOA of R$6.54 trillion includes R$1.82 trillion of debt rollover. Excluding refinancing, revenue in the fiscal and social security budgets is R$4.52 trillion (R$2.93 trillion plus R$1.60 trillion), about US$848 billion.

Step by step

1. Track the target, not just the headline: the LDO sets the primary target and band each year (LC 200 art. 2; LRF art. 4, § 5, IV); read the Annex of Fiscal Targets when the LDO is published.
2. Watch the bimonthly revenue and spending evaluation reports: a freeze under LRF art. 9 can delay discretionary payments, including public contracts and transfers.
3. For public contracts and concessions, confirm that the spending is in the LOA and that the budget line exists before signing (Constituição art. 167, I and II).
4. When dealing with a state, check its personnel spending against the 60 percent cap (LRF art. 19) and whether it joined Propag (LC 212), which may involve transfers of state company stakes to the Union.
5. Follow the 2027 budget: the LDO bill (PLN 2/2026) and LOA bill (PLN 24/2026) are pending in Congress; check the joint budget committee calendar before relying on 2027 figures.
6. Use the Central Bank's monthly fiscal statistics release (around the end of each month) for the primary result and debt ratios, the measures used by LC 200.

Common traps

Confusing the Central Government target with the consolidated public sector result. The LDO target covers the Central Government (Lei nº 15.321 art. 2), while the Central Bank headline primary deficit of 0.62 percent of GDP covers the whole public sector, including states, municipalities and state companies.
Assuming the budget is fixed once approved. LRF art. 9 forces spending freezes when revenue underperforms, and supplementary credits change appropriations during the year.
Treating the R$6.54 trillion budget as spending capacity. R$1.82 trillion is debt refinancing (Lei nº 15.346 art. 2, III).
Relying on a budget line before the golden rule credit passes. R$288.1 billion of 2026 fiscal revenue depends on Congress approving supplementary credit by absolute majority (Lei nº 15.346 art. 2, sole paragraph).
Expecting the 2027 numbers to hold. The 2027 LDO and LOA bills were still pending in Congress in October 2026; the bill's R$1,741 minimum wage is a proposal and the final value depends on November INPC.

Sources

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