Key Points
— Brazil’s Ministries of Finance and Planning sent the 2027 Budget Guidelines Bill (PLDO) to Congress on Wednesday with a primary surplus target of 0.50% of GDP, or R$73.2 billion, with a tolerance band of ±0.25pp (floor R$36.6 billion, ceiling R$109.8 billion). The trajectory continues at 1.0% in 2028, 1.25% in 2029, and 1.50% (R$272.2 billion) in 2030.
— Gross debt is projected to keep rising until 2029, when it peaks at 87.8% of GDP, before beginning a declining trajectory in 2030. The PLDO computes 39.4% of precatórios (court-ordered payments) inside the primary target—well above the 10% constitutional minimum—while R$57.8 billion remains outside the calculation.
— Because 2025 closed with a R$61.7 billion central-government deficit, the fiscal framework’s automatic gatilhos are now activated: real personnel spending growth capped at 0.6% annually, and a ban on new, expanded, or extended tax benefits. Personnel spending growth is projected to decelerate from a 6.1% average (2023-2026) to 4.2% in 2027 and 3.6% by 2030.
Lula’s last-year-of-term fiscal bill is now also the first-year-of-term bill for whoever wins in October 2026. The automatic gatilhos lock in spending discipline regardless of who writes the 2027 budget, which is either a gift to the next president or a handcuff, depending on who you ask.
The Brazil 2027 budget law sent to Congress on Wednesday April 15 is the first Brazilian fiscal framework in which the arcabouço fiscal’s automatic containment triggers have been activated, and it projects a path that reaches primary surplus of 1.5% of GDP by 2030. The Rio Times, the Latin American financial news outlet, reports that the PLDO maintains the 0.50%-of-GDP target already forecast in prior budget cycles (equivalent to R$73.2 billion) and confirms an acceleration of precatórios inside the primary calculation—a technical concession aimed at reducing the perceived manipulation of the fiscal metric.
The Surplus Trajectory and the Debt Peak
The government’s stated central projection is a R$73.6 billion primary surplus in 2027, marginally above the R$73.2 billion target midpoint. The tolerance band matters: the floor is R$36.6 billion and the ceiling R$109.8 billion, meaning the arcabouço would be formally met even with a surplus well below target. In subsequent years the targets rise to 1.0% of GDP in 2028, 1.25% in 2029, and 1.50% in 2030—equivalent to R$272.2 billion at the endpoint.
The debt numbers tell the story investors actually price: gross general government debt is projected to rise from 86% of GDP in 2027 to 87.8% in 2029—the peak—before beginning to fall in 2030. That trajectory is what makes the primary surplus targets matter, since only sustained primary surpluses of at least 1% of GDP combined with real GDP growth above 2% can inflect the debt trajectory downward. Everything in the 2028-2030 targets is about buying that inflection.
The Precatórios Move and What It Signals
Brazil’s constitutional rules allow as little as 10% of precatórios (court-ordered judgment payments against the federal government) to count inside the primary result. The PLDO raises that to 39.4% in 2027, rising to 56.2% in 2028 and scaling up annually until reaching 100% in 2036. That leaves R$57.8 billion outside the 2027 target—the same as 2026—but the direction matters more than the year-one level.
A residual R$347 billion of precatórios stock will remain outside the target until 2035, reflecting the settlement reached with the Supreme Court after years of litigation over the PEC Emergencial. The inclusion schedule is a concession to investors and ratings agencies, who had long criticized the exclusion as an accounting device that overstated fiscal discipline. It is also a signal that the Finance team expects this to be credible enough to reach the next government intact.
The Gatilhos: Why 2027 Is Different
Because 2025 closed with a central-government primary deficit of R$61.7 billion, the fiscal framework’s automatic containment gatilhos are now regulated for the first time—and they apply regardless of which party wins the October 2026 presidential election. The first gatilho caps real growth of federal personnel spending at 0.6% per year. The second prohibits new, expanded, or extended tax benefits until the government returns to primary surplus.
The practical effect: projected nominal personnel spending growth falls from the 6.1% average of 2023-2026 to 4.2% in 2027, 3.8% in 2028, and 3.6% annually in 2029-2030. Planning Secretary Bruno Moretti defended the composition in a Wednesday press briefing as a “natural deceleration” after the Lula government’s 2023-2025 reconstitution of civil service hiring. Whether Congress sustains the gatilhos in the 2027 budget, or whether the next government seeks flexibilization under the calamidade-pública exception, is the first market-relevant political question of the 2027 fiscal year.
What Markets Believe vs. What the Government Projects
The gap between the government’s own macro assumptions and market consensus remains wide: the PLDO 2026 cycle projected Selic at 12.56% in 2026 falling to 7.27% by 2029, while the market consensus sees Selic at 12.5% in 2026 but 9.75% in 2029. On growth, the government projects 2.5-2.6% annually through 2029; the market projects 1.7-2.0%. Those divergences matter because the government’s fiscal projections assume the revenue base implied by its own growth and rate assumptions, not the market’s.
Finance Minister Dario Durigan, speaking from Washington during IMF Spring Meetings, called the scenario “challenging”—a notable tone shift from the communication style in 2024 LDO cycles. The bill now enters Congress in the middle of Nilton David’s hawkish pushback on the real’s rally and ahead of the October 2026 election, which means every technical detail will be relitigated as political currency.
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