Brazil's budget

An analysis of the government plans for 2027 in the face of the economic, fiscal and institutional restrictions of Brazil

1. Before promises, there is a budget

Before discussing which candidate presents the most interesting proposals for education, security, infrastructure, industry or development, there is a basic question: how much will the next president really be able to do?

The president elected in 2026 will not receive a blank sheet. high public debt, significant financing cost and, above all, an extremely rigid federal budget. Much of the Union's expenditure will already be committed even before the new government sets its priorities.

The Annual Budget Bill of 2027 helps to scale up the problem. According to the Ministry of Planning and Budget, 91.7% of primary expenditure planned for 2027 is compulsory.

This does not mean that the remaining 8.3% are free for new promises. In this space there are also expenses necessary for the functioning of the administration, investments and discretionary policies already existing. In practice, the margin available is even smaller.

There is also the problem of debt.

In the scenario of the Independent Tax Institution, the General Government's gross debt is projected at approximately 82% of GDP in 2026 and 86% in 2027, with Net nominal interest close to 8% of GDP in 2027.

It is projections, not results achieved. Still, it shows the size of the restriction. Debt can finance economically justifiable investments, but growing debt combined with high interest makes this strategy increasingly expensive.

The uncertainty becomes even clearer when we compare the projections for 2027.

The PLOA works with an approximate primary surplus of R$18 billion. IFI, using its own premises, projects an approximate deficit of R$86 billion. The difference exceeds R$100 billion.

This does not mean that one projection is necessarily right and the other is wrong. It means that fiscal results depend on assumptions about growth, inflation, collection and spending. Therefore, figures presented by governments and candidates need to be analyzed against the assumptions that underpin them.

The same applies to GDP. While the PLOA considers growth close to 2.5% in 2027, the IFI works with approximately 1.8%. A seemingly small difference can produce significant impacts on collection and debt.

For this reason, figures presented by the government, opposition or candidates will not be automatically treated as facts in this article.

Tax diagnosis also does not mean that the next government will be condemned to immobility. It just means that new priorities will require space to exist.

This space can arise by reducing or reforming expenditure, increasing revenue, privatization, concessions, reorganizing public policies, private capital or reforms that increase productivity and growth.

Each alternative, however, has consequences.

Extraordinary revenue may finance specific investments, but it does not sustain recurrent expenditure indefinitely. Similarly, those who promise to finance policies with future growth need to explain what reforms will produce this growth and how long it will take to generate results.

This will be an important rule throughout this article.

An ambitious proposal will not be considered unfeasible only because the resources do not exist today. If there are reforms capable of releasing resources or plausible mechanisms to mobilize capital, this chain needs to be analyzed.

But a policy is not consistent either, just because its objective is desirable. 

When a proposal creates an expense, explaining who will pay for it is part of the proposal itself.

So it's not enough to ask:

What do you intend to do?

You have to ask:

Where will the resources come from? What does it need to change to make this possible?

And what happens if the plan's premises don't confirm?

2. What transforms a promise into economic policy?

Government plans are documents of intent. They present priorities, objectives and a certain country vision. The problem begins when the intention is confused with public policy.

To say that Brazil needs to improve education, reduce crime, generate jobs, develop industry or reduce taxes is relatively simple. The difference is when we need to respond how it will be done, how much it will cost and what changes will be needed.

This difference will guide the analysis of the six programmes.

We will not start from the amount of proposals or treat a policy as good or bad simply because it is associated with the left or the right.

The analysis will follow four criteria: diagnosis, coherence, funding and execution.

Diagnosis: the candidate is trying to solve the right problem?

Every policy begins with an interpretation of reality.

One candidate may understand that a particular sector is growing little due to lack of credit. Another may see legal uncertainty, excessive taxation or insufficient infrastructure.

Before we look at the solution, we need to understand the diagnosis. A technically sophisticated policy can still fail if you are trying to solve the wrong cause.

Consistency: the solution is derived from the diagnosis?

Identifying a problem correctly does not guarantee a coherent solution.

A programme can defend deficit reduction and, at the same time, create new permanent expenditure.

The proposals need to work together. Tax reform, expenditure, regulation, social policies and infrastructure interfere with each other.

Funding: who pays the bill?

This may be the most important question in the face of the Brazilian fiscal situation.

Policies can be financed by taxes, reduction of expenses, debt, concessions, privatizations or private investment. Others depend less on public money and more on changes in economic incentives.

None of these alternatives will be discarded in advance. What matters is that there is a plausible relationship between the proposal and the resources needed.

It is also essential to distinguish permanent revenue from temporary revenue.

The sale of a public asset generates revenue once. A permanent policy generates expenditure every year. The same care applies to proposals financed by future growth. 

Implementation: The president can do what he promises?

There is a difference between an economically possible policy and an institutionally enforceable policy.

The president has great power, but he doesn't rule alone.

Some measures depend only on the Executive. Others need Congress, constitutional changes, states, municipalities or private investors' response.

If an investment depends on the economy generated by a reform, the reform must happen first. If it depends on private capital, it is necessary to explain what conditions will attract that capital.

A liberal analysis, with the same criteria for all

The analysis starts from a predominantly liberal perspective, valuing economic freedom, private property, legal security and fiscal responsibility, without treating the state's performance as necessarily negative.

The criterion will be the same for all programs, regardless of their political orientation: the proposal makes sense, has funding, can it be implemented and continues to stand if the economic scenario worsens?

More than evaluating what each candidate intends to do, the goal is to understand how he intends to make his proposals possible in Brazil real.

Part I: Six country projects

3. Lula: The State as an inducer of continuity

Lula's program is part of a proposal to continue and deepen the model of its current government. The state remains as an inducer of development through public investment, credit, social programs and government coordination.

This vision appears in the defense of investments in infrastructure, energy transition, industrial policy and sectors considered strategic. The private sector participates, but the government plays a relevant role in setting priorities.

There is economic logic in this strategy. Public infrastructure can increase private productivity, industrial policies can be justified in the face of certain market failures and social programs also have effects on consumption and human capital.

The central question is another: is this strategy part of the fiscal situation that the next government will find?

With little discretion and high debt, a project based on strong state investment capacity needs to explain how it intends to recover that capacity.

The programme has considerable weaknesses in this respect. The proposals for investment and expansion of the state's activities are clearer than the mechanisms necessary to open up structural space in the budget.

There is still a particularity. Lula will be competing for election after four years in government. Her program can be conFrontado not only with what she promises, but with the economic and fiscal situation existing at the end of her own term.

The programme makes it relatively clear where the State should act, but it is less precise on how to create the fiscal space necessary to expand this activity.

That's your main economic issue.

4. Flávio Bolsonaro: Less state in the discourse, how much in the structure?

The Bolsonaro program is part of a different diagnosis. A significant portion of Brazilian economic problems would be the result of the growth of the state, public expenditure, tax burden and fiscal deterioration.

The proposed response combines cost reduction, administrative reform, tax reduction, destatisation and greater private participation.

The programme promises to reduce at least ten ministries, cut fees and expenses, resume privatisations and modify tax rules to give greater weight to the debt path.

There is an explicit fiscal concern and a direct relationship between balance of public accounts, risk reduction and the possibility of lower interest rates.

The challenge is the size of the measures.

Reducing ministries may have administrative and symbolic value, but it represents a small portion of the tax problem. Much of the Brazilian expenditure is linked to much greater obligations. A structural change requires precisely meeting these expenses.

The same applies to tax reductions. Reducing the burden can help to increase growth, but in the face of the tax situation, the loss of collection needs to be accompanied by a consistent reduction in expenditure.

The program also establishes ambitious Metas, such as 4% growth per year and approximately R$900 billion in infrastructure for four years. The question is how much of this investment would come from the private sector and what reforms would be needed to mobilize it.

The direction is clear: minor state, greater fiscal discipline and private protagonistship.

The question is whether the proposed cut would actually reach the large structural costs or remain concentrated on the most visible and tax-relevant parts of the public machine.

5. Ronaldo Caiado: Is it possible to transform Goiás into a national model?

The Ronaldo Caiado program places the stabilization of public accounts, combined with security, investment and greater private participation, among its priorities.

One of the main proposals is the so-called Truth Budget, which provides for a review of the Union's compulsory expenditure, subsidies, tax benefits and tax risks.

The aim is to contain the growth of compulsory expenditure, recover primary surpluses and stabilise debt without relying on successive tax increases.

Caiado also establishes an ambitious Meta: raise the Brazilian investment rate from approximately 17% to 25% of GDP, mainly through private capital, concessions and partnerships.

The diagnosis recognizes a central problem: expanding investments requires first facing the rigidity of public expenditure.

The challenge is political. Changing compulsory spending means facing some of the most difficult areas of the budget and depending, in many cases, on Congress.

Goiás' experience serves as a reference for the programme, but governing the Union involves much greater restrictions.

The proposed sequence is clear: fiscal adjustment, recovery of investment capacity and mobilisation of private capital.

The question is how politically enforceable and sufficient these reforms would be to achieve such ambitious Metas.

6. Romeu Zema: The management shock meets Brasília

The Romeu Zema program is strongly associated with the idea of reducing the state, fiscal discipline and administrative efficiency.

The proposal seeks to transport to the federal government principles applied in Minas Gerais: machine reduction, privatization, benefit review, deregulation and greater private participation.

In the fiscal area, the ambition is high. The application team defends turning the primary deficit into a surplus of 1% of GDP already in the first year, without tax increases, through cuts, expenditure review and efficiency.

The logic is liberal and relatively clear: first reorganise public accounts and then create space for tax reduction and private investment.

The challenge is on the scale.

Managing Minas Gerais and reforming the federal budget are different tasks. 

Security, constitutional ties, benefits and expenses of other powers limit what a president can change on his own.

Zema has a clear direction. The main test will be to know how much of the mining experience can be reproduced in Brasília and how much of the economies planned depend on reforms that will require broad political support.

7. Augusto Cury: Can a project of human transformation become public policy?

Augusto Cury's plan is the one that distances itself from a conventional economic program.

Its starting point is human development, with great attention to education, emotional health, prevention of psychological disorders, teacher training and transformation of social relations.

There is merit in this concern. Education, human capital and mental health produce real consequences on productivity, employability and quality of life.

My respite is in execution.

At various times, the program is closer to the language of personal development than expected concreteness of a government plan. 

Attractive ideas need to be transformed into policies with Metas, costs, responsible institutions and verifiable results.

It is in this passage between vision and execution that I find its main fragility.

The program clearly describes the society you would like to build, but your economic and fiscal strategy receives less attention.

Cury perhaps presents the most humanist project among the six candidates. The question, however, remains pragmatic:

How can this vision be transformed into publicly funded, measurable and enforceable policies?

8. Renan Santos and the Mission: Reform first to invest later

Among the programs analyzed, Renan Santos and the Mission Party are the closest to the economic perspective adopted in this article. This needs to be said with transparency.

The most important aspect, however, is not only the ideological proximity, but the attempt to present a sequence for the reforms.

The program starts with a diagnosis of rigid expenses, low productivity, legal insecurity, bureaucracy and difficulty in turning public resources into investment and growth.

The response involves structural reforms, reorganisation of spending, economic openness and creation of conditions more favourable to private investment.

The difference is mainly in the order: reform the state, open fiscal space, improve the institutional environment, attract capital and then expand the investment capacity.

This logic also appears in the most ambitious proposals, such as transforming the Northeast into an industrial and technological pole and developing chains related to rare earths, batteries, energy and new technologies.

These are projects that require a lot of capital. The stake is not only in the Treasury, but in creating economic and legal conditions to mobilize private investment.

This logic is particularly relevant in a country in which the state does not have enough resources to finance a major economic transformation on its own.

This does not eliminate risks. Deep reforms depend on Congress, cuts find resistance and private investment does not automatically arise after the passing of a law.

The project therefore depends on political capacity to carry out the first reforms before their benefits appear.

The Economist also drew attention to the candidacy and its reform platform, a theme to which we will return later.

There is a considerable distance between an ambitious proposal and an enforceable proposal.

The question is whether this bridge would bear the weight of the ambitions presented.

Part II: Six plans before the same Brazil

9. Six plans, one country

After analyzing the programs individually, the differences between them become easier to see.

Lula is committed to greater capacity of the state. Flávio Bolsonaro, Caiado and Zema seek to recover space through fiscal adjustment, reforms and greater private participation. Cury shifts the focus to human development. Renan organizes its strategy in a sequence of reforms prior to the expansion of investment.

There are also convergences. Rare lands, infrastructure, productivity and investment appear, with different weights, in various projects.

This reveals something important: candidates do not always disagree about the problems of Brazil. They mainly disagree about how to solve them.

From here, therefore, it is not necessary to repeat each plan. They just need to face three tests. which may still separate government intention: Money, Brasilia and Reality.

10. The test of money: who pays the bill?

The tax situation has already been presented at the beginning of this article. The question now is:

What is the financial mechanism of each strategy?

There are basically some ways: to increase revenue through taxes and other forms of taxation, to reduce expenditure, to sell assets, to grant projects to the private sector, to attract capital or to create conditions for economic growth to expand fiscal capacity in the future.

None of them are free.

Extraordinary revenue does not sustain permanent expenditure indefinitely. Tax reductions need to be cost-friendly. Concessions depend on economically attractive projects. Administrative courts can produce savings, but not necessarily on the scale required by a structural adjustment.

The Mission's plan presents a more specific response by proposing changes in own expenditure before expanding the investment capacity. defends a PEC aimed at balancing public accounts, with measures of deindexation, changes in floors and reduction of waivers. According to the program itself, these changes could generate an economy of R$ 1.1 trillion by 2031. 

The estimate obviously depends on the approval and operation of these reforms.

The point is not to assume that money will exist. It is necessary that great promises are linked to some verifiable financing mechanism.

11. The test of Brasília: the president can do this?

Even when the account closes on paper, there is a second barrier:

The president doesn't rule alone! 

Some changes can be made by the Executive. Others depend on laws, parliamentary majority or constitutional changes. The more structural the reform, the greater the dependence.

This is particularly important because several of the programmes analyzed propose changes that go beyond a simple administrative reorganization.

The Mission tries to incorporate this difficulty into the institutional design itself. Management Responsibility Act, based on performance indicators and the attempt to relate resources and political incentives to measurable results.

But there is an inevitable paradox: to change the rules of the game, first you have to get votes within the current rules.

In the end, any president will need to turn project into majority and majority legislation. That's the distance between having a plan and being able to rule with it.

12. The test of reality: what if the economy does not cooperate?

There is still a variable that no program controls completely: reality may not collaborate.

The projections presented at the beginning of this article show how expectations about growth, collection, debt and fiscal results can diverge. It is not necessary to decide in advance which of them will be correct. The important thing is to recognize that any government plan will be implemented in an uncertain scenario. 

Reforms can save less than expected. Congress can reduce its reach. Privatizations can delay. Private investment can take a while to show up. Collection can disappoint.

So perhaps the most important question is not what each candidate will do if everything works, which is what he will stop doing if it doesn't work!

If the expected fiscal space does not arise, some promise will have to be postponed, reduced, modified or abandoned. A serious plan does not need to predict the future accurately.

You need to be prepared for when reality contradicts your predictions. 

Part III: The Eyes of the Outside

13. The Economist's Look  

The application for Renan Santos also drew attention to the The Economist.

In August, the magazine presented him as a .dark horse. of the election, a candidate who ran out of town, analyzing his platform for economic reforms in a dispute dominated by much larger political forces.

A few weeks later, in an editorial about Brazil, the publication stated that the country was . .turning your back on your future. while remaining trapped in the dispute between the camps of Lula and Bolsonaro. In the evaluation of the journal, these groups did not present sufficient answers to problems such as increased spending and the need for economic reforms.

In this context, Renan again highlighted his reforms and the possibility of transforming Brazil into a great power.

The relevance of these analyses is in convergence. A traditional international publication in economic coverage identified in the Mission project an attempt to address some of the structural limitations discussed throughout this article. 

Part IV: Brazil Possible

14. Between the promised and the possible country 

After analyzing six projects, perhaps the main difference between them is not only the size of the state they imagine, but also the choice they propose to reach the country they want.

And those choices are not limited to the budget.

A particularly important issue appears in the relationship between economic openness and Brazilian strategic interests.

Attracting private capital does not mean accepting any business. Rare lands, for example, can give to Brazil bargaining power before the United States, China, Europe and other powers.

The alternative to protectionism does not need to be commercial submission.

If Brazil has resources that the world wants, it can use them to negotiate investment, technology, industrial processing, infrastructure and integration into global chains, rather than simply exporting them without a long-term strategy.

This logic summarizes a larger issue present throughout the article.

Economic policy is made of exchanges. Spending more in one area reduces space in another. Cutting taxes requires accommodating revenue loss. Reforming produces political costs. Opening markets creates opportunities and risks. Protecting sectors also has costs.

There is no project without choices.

There is only the possibility of making them more or less conscious.

Conclusion.

Perhaps this is the main conclusion after reading the six programmes:

Rule does not just mean choosing what to do, it also means choosing what not to do.

Resources are limited, priorities compete with each other and not all reforms will produce the expected results.

So no candidate should get a blank check.

Politics should not be treated as football. Recognizing a good idea in someone we disagree with and questioning a proposal from someone we sympathize with is part of a conscious choice.

Read the projects, compare the mechanisms, question the numbers, observe the priorities.

And it covers from the candidates the willingness to defend what they propose.

Those who want to govern a country must be willing to attend the debates, face difficult questions, be sabotaged and put your ideas to the test before society.

Asking for the vote without submitting to this conFronthe public precisely reduces the information that the voter needs to decide. Democracy does not depend on everyone making the same choice. It depends on each citizen being able to make his or her own consciously.

And that requires not only voters willing to question, but candidates willing to answer.