Lula Government 2026: Policies, Cabinet, Approval Ratings — Complete Guide

In 2026, Brazil’s Lula government is navigating a critical re-election year. President Luiz Inácio Lula da Silva — pursuing a fourth non-consecutive term in the October 4 election — oversees a cabinet reshaped by pre-campaign departures, a record-low unemployment rate of 5.6% (2025 annual average), GDP growth of 2.3% in 2025, and approval ratings hovering near 47% (Datafolha, March 2026), while managing flagship programs including tax reform and Bolsa Família expansion.

Who Is in the Lula Cabinet in 2026

As of April 4, 2026 — the legally mandated deadline for candidates to vacate executive posts ahead of October elections — at least 18 of Lula’s 37 ministers resigned to mount their own campaigns. The president confirmed he would not appoint new permanent ministers, with executive secretaries and deputies stepping up.

Below is the key cabinet composition as of early April 2026, per Wikipedia’s Cabinet of Brazil (updated April 4, 2026) and Agência Brasil.

Key Lula Government Policies

Tax Reform: Consumption and Income Overhaul

Brazil’s most significant structural reform in decades is unfolding in two tracks. Consumption tax reform: Constitutional Amendment 132, approved in 2023, merges five existing levies into a VAT-style dual structure (IBS + CBS) plus a Selective Tax.

Complementary Law No. 214/2025, sanctioned on January 16, 2025, launches the transition period starting January 1, 2026, per EY Global Tax News. Full implementation extends to 2033.

Income tax reform: The Brazilian Senate unanimously approved Bill 1.087/2025 in November 2025, exempting Brazilians earning up to R$5,000/month from income tax and creating a 10% minimum tax on incomes above R$600,000/year, including dividends. The reform takes effect in 2026 and removes more than 10 million Brazilians from the income tax rolls, according to CICTAR analysis.

For a deeper analysis, see the Brazil Tax Reform Complete Guide.

Bolsa Família and Social Policy

Lula’s revamped Bolsa Família — relaunched in March 2023 with a guaranteed minimum of R$600 per family per month — reached approximately 20.8 million beneficiary families (covering around 26% of Brazilian households) by April 2024, according to Policy Basket / End Hunger and Poverty. The program includes a R$150 “Benefício Primeira Infância” for each child under six.

Bolsa Família’s 2023 re-launch coincided with a “PEC da Transição” that suspended the existing spending cap to accommodate a R$145 billion fiscal expansion, enabling elevated social spending in years one and two of the term. The minimum wage was increased to R$1,518/month as of January 2025, up from R$1,412 in 2024, in line with Lula’s wage valorization policy.

Environmental Policy and the Amazon

Environment Minister Marina Silva led one of the government’s most internationally celebrated achievements: Amazon deforestation fell 50% cumulatively between 2022 and 2025. For the 12-month period ending July 2025, INPE’s PRODES system recorded 5,796 km² cleared — an 11% year-on-year decline and the third-lowest rate in records dating to 1988, per Brazil’s official communications secretariat (Secom).

Deforestation in the Cerrado also declined 11.49% to a six-year low of 7,235 km². The gains were reinforced before COP30, which Brazil hosted in Belém in November 2025.

However, critics — including climate NGO 350.org — point to the government’s approval of new Petrobras exploratory drilling near the Amazon river mouth as a contradictory signal, as reported by Democracy Now!. The government’s goal of zero deforestation by 2030 remains official policy.

Nova Indústria Brasil: Industrial Policy

Launched on January 22, 2024, Nova Indústria Brasil (NIB) is the Lula government’s flagship neo-industrialization initiative, organized around six strategic missions — from sustainable agro-industrial chains and health system resilience to digital transformation, bioeconomy, and national defense. Total financing committed: over R$300 billion through 2026, managed primarily through BNDES, Finep, and Embrapii.

By May 2025, BNDES had already deployed R$205 billion under the NIB framework, with one-year milestones including R$3.4 trillion in mobilized public and private investment and 3.7% industrial growth, according to Brazilian Natural Resources. The NIB’s long-term horizon extends to 2033, with an Action Plan for 2024–2026 approved by the National Industrial Development Council (CNDI).

Foreign Policy: BRICS, Mercosur–EU, and Global South Positioning

Lula has repositioned Brazil as a central node in the emerging multipolar world order. On January 9, 2026, European Union member states approved the EU–Mercosur Partnership Agreement — a 25-year negotiation process that culminated under Lula’s direct diplomatic engagement.

The deal creates one of the world’s largest free-trade zones, covering 718 million people and a combined GDP of approximately USD 22.4 trillion. Tariffs on roughly 95% of EU-imported goods will be gradually eliminated, per Planalto.

The formal signing ceremony was held in Asunción, Paraguay, on January 17, 2026. Brazil also chaired the BRICS bloc in 2025, hosting the summit in Rio de Janeiro.

U.S. tariffs of up to 50% imposed on Brazil in mid-2025 — partly linked to the prosecution of former President Bolsonaro — accelerated Brazil’s trade diversification drive. For a full breakdown, see the Mercosur–EU Trade Deal Guide and the BRICS 2026 Complete Guide.

Approval Ratings & Public Opinion

Lula’s approval ratings entered 2026 in a trajectory of gradual erosion from the highs of 2023, reflecting the weight of high interest rates, persistent inflation expectations, and the upcoming electoral contest.

The trend tells a clear story: Lula entered his third term with approval ratings above 50% in early 2023, supported by the glow of electoral victory and Bolsa Família re-launch. Ratings declined through 2024 as inflation re-accelerated and the central bank raised the Selic aggressively.

By Q1 2026, most major pollsters show Lula in a statistical tie with or slightly below 50% approval — a competitive but vulnerable position heading into a presidential race. The AtlasIntel firm, which was one of the most accurate pollsters in 2022, showed 40.6% rating the government “good” or “excellent” as of March 2026.

Economic Performance Under Lula

Lula’s third term has delivered above-trend GDP growth in its first two years, followed by a monetary-policy-induced deceleration in 2025–2026. The scorecard:

Selic path: The Banco Central’s Monetary Policy Committee (Copom) under Governor Gabriel Galípolo held rates at 15% from June 2025 through February 2026, marking the highest rate since 2006. On March 18, 2026, Copom unanimously cut 25 basis points to 14.75% — the first reduction in nearly two years — but signaled caution given Middle East tensions, per Bloomberg.

Trading Economics projects a further cut to 14.50% by Q2 2026. Inflation expectations sit at 4.1% for 2026 and 3.8% for 2027, above the 3% target.

See the full Brazil Economic Outlook 2026 for deeper analysis.

Fiscal context: Brazil’s 2025 tax revenues hit a record R$2.89 trillion — a 7.5% real increase year-on-year, as reported by Bloomberg. The government’s 2025 primary fiscal target was a deficit of zero (±0.25% of GDP tolerance band).

Sustained high interest rates and the restrictive monetary stance have been a persistent source of conflict between Lula and Copom, with the president publicly criticizing “excessive” rate policy.

Major Controversies and Scandals

Banco Master Collapse (R$41 Billion)

The largest financial fraud in Brazil’s modern history unfolded in 2025. Banco Master — a challenger bank owned by Daniel Vorcaro that grew rapidly through high-yield CDBs — was ordered into extrajudicial liquidation by the Banco Central on November 17, 2025, following revelations of a sophisticated fraud scheme.

The key facts, per Signature Litigation / Thomson Reuters Regulatory Intelligence:

• Jan–May 2025: Master sold R$12.2 billion in fake credit portfolios to state-run Banco de Brasília (BRB) to inflate its balance sheet.
• March 2025: BRB agreed to acquire 58% of Master at 75% of book value; deal blocked by Banco Central in September 2025 over unresolved accounting issues.
• November 17, 2025: Liquidation ordered. Vorcaro arrested at São Paulo Guarulhos airport while boarding a private jet to Malta.
• FGC exposure: Brazil’s deposit insurance fund (Fundo Garantidor de Créditos) faces a record R$41 billion payout for 1.6 million creditors, capped at R$250,000 per person, per AInvest.
• PCC links: Federal Police identified overlaps between Master’s transaction network and entities under investigation for money laundering connected to São Paulo’s organized crime group PCC (Primeiro Comando da Capital).
• Political fallout: A Senate committee in April 2026 rejected a report calling for the indictment of three STF justices and the prosecutor general over alleged ties to Master, following a last-minute swap of committee members orchestrated with government support, per The Brazilian Report.

The full timeline is covered in the Banco Master Scandal Complete Timeline.

STF Appointments and Institutional Tensions

Lula has made two Supreme Court (STF) appointments in his third term. Flávio Dino was elevated from Justice Minister to the STF in February 2024.

In November 2025, Jorge Messias — Brazil’s Solicitor General — was appointed to fill a vacancy created by the early resignation of Justice Luís Roberto Barroso (who stepped down in October 2025, eight years ahead of mandatory retirement), per AP News. Both appointments have been criticized by opposition groups as politicizing the court, though Messias was confirmed by the Senate.

Former Justice Minister Ricardo Lewandowski was also noted to have acted as a consultant to Banco Master’s owner Daniel Vorcaro during the bank’s crisis period, creating reputational complications.

Fiscal Policy Tensions

The “PEC da Transição” — a constitutional amendment allowing R$145 billion in additional spending in 2023 to fund Bolsa Família beyond the prior spending cap — set a pattern of fiscal tension throughout the term. In mid-2024, a credibility crisis over fiscal commitments sent the Brazilian real down 13% against the dollar in six months, forcing a R$25.9 billion spending cut package, per Reuters.

A July 2025 IOF (financial transactions tax) decree — intended to raise revenue from wealthier taxpayers — was overturned by Congress, forcing Lula to appeal to the STF. Persistent fiscal-monetary tensions remain a key risk for investors heading into the election.

2026 Election Implications

Brazil’s general election is scheduled for October 4, 2026 (first round), with a potential runoff on October 25. Lula, age 80, officially announced his candidacy for a fourth non-consecutive term during a state visit to Indonesia in October 2025, per AP News.

He confirmed Geraldo Alckmin as his running mate on March 31, 2026, per Reuters.

The Opposition: Flávio Bolsonaro

The right-wing opposition consolidated around Senator Flávio Bolsonaro (PL), son of former President Jair Bolsonaro (currently serving an 8-year prison sentence for attempting a coup). Governor Tarcísio de Freitas of São Paulo — once considered the primary opposition candidate and favored by markets — declined the presidential race after Jair Bolsonaro chose his son over him, opting instead to seek re-election as São Paulo governor, per Americas Quarterly.

Current Polling (April 2026)

• Datafolha (April 11, 2026): In a simulated runoff, Flávio Bolsonaro leads 46% vs. Lula 45% — within the ±2pp margin of error and statistically tied, per Bloomberg and Reuters.
• Quaest (April 15, 2026): Flávio Bolsonaro 42% vs. Lula 40% in the second round — Bolsonaro numerically ahead for the first time, per a Genial/Quaest report. Lula leads in the first round 37% to 32%.
• AtlasIntel (March 2026): First-round: Lula 45.9%, Flávio Bolsonaro 40.1%. Second-round: Lula 46.6%, Flávio 47.6% — a statistical tie.
• BTG Pactual/Nexus (April 24–26, 2026): First round: Lula 45%, Flávio Bolsonaro 39%, per Polymarket metadata.
• Prediction markets: As of late April 2026, Polymarket assigns Flávio Bolsonaro ~41% win probability vs. Lula ~36%, reflecting the tightening race.

“Brazil’s October election now looks like a coin-flip.”
— Brian Winter, Americas Quarterly editor-in-chief, March 2026

The race hinges on several variables: the economic trajectory through mid-2026 (lower Selic, employment stability), the resonance of the Banco Master/corruption narrative among swing voters, Flávio Bolsonaro’s ability to consolidate right-wing votes beyond his father’s base, and whether Lula can hold the northeast strongholds that delivered his 2022 margin. A full electoral analysis is available at the Brazil Elections 2026 Complete Guide.

Recent Developments · updated June 15, 2026

The monetary backdrop hardened in June. Brazil’s June 8 Focus survey lifted the median 2026 Selic forecast to 13.5%, the first upward revision after months of stability, and markets soon repriced the benchmark toward the 14% range once the central bank canvassed economists.

For the Lula government, higher-for-longer rates complicate the fiscal framework it has fought to defend, raising debt-service costs even as it blocks spending to hold its targets.

The tightening bias leaves little room for the rate cuts the administration hoped would ease borrowing before the vote. With inflation tracking near 5.1%, the economic team faces a sharper trade-off between credibility and growth, and participants now see only one or two cuts left in the cycle.

That constraint shapes how Brasilia frames its 2026 economic record.

Watch the next Copom decision and the weekly Focus revisions; together they will decide whether the cabinet can point to easing conditions or must keep defending its framework against a costlier-debt narrative through the second half of the year.

Frequently Asked Questions (FAQ)

Is Lula running for re-election in 2026?

Yes. President Luiz Inácio Lula da Silva officially announced his candidacy for a fourth non-consecutive presidential term during a state visit to Indonesia on October 23, 2025.

At age 80, he confirmed Geraldo Alckmin as his running mate on March 31, 2026. Brazil’s constitution permits two consecutive terms, but places no limit on non-consecutive terms, making Lula constitutionally eligible.

Brazil’s first round of voting takes place on October 4, 2026.

What is Lula’s approval rating in 2026?

As of Q1 2026, Lula’s job approval sits near 47% in Datafolha polling (March 3–5, 2026) and 44% in Quaest (March 2026). AtlasIntel/Bloomberg (March 18–23, 2026, n=5,028) shows 45.9% approval and 53.5% disapproval.

This represents a decline from his highs above 55% in early 2023, driven primarily by inflation concerns, high interest rates, and the Banco Master fallout.

Who is Lula’s Finance Minister in 2026?

Dario Durigan has served as Finance Minister since March 20, 2026, after Fernando Haddad resigned to campaign for Governor of São Paulo. Durigan was previously the ministry’s executive secretary and is regarded as a continuity appointment committed to the existing fiscal framework.

Brazil’s Central Bank is headed independently by Gabriel Galípolo, who took office January 1, 2025, and implemented a first rate cut — to 14.75% — in March 2026.

What is Brazil’s GDP growth under Lula?

Brazil’s economy grew 2.9% in 2023 (revised to 3.2% by IBGE in late 2025), 3.4% in 2024 — the highest rate since 2021 — and 2.3% in 2025, as monetary tightening (Selic at 15%) slowed household and investment demand. The BBVA Research 1Q26 forecast projects 1.7% growth for 2026, recovering to ~2.2% in 2027 as monetary easing takes effect.

GDP per capita reached R$55,247 in 2024, a 3% real increase from 2023, per IBGE.

What happened in the Banco Master scandal?

Banco Master, a Brazilian challenger bank, was ordered into extrajudicial liquidation by the Banco Central on November 17, 2025, following the discovery of R$12.2 billion in fake credit portfolios sold to state-run Banco de Brasília. Owner Daniel Vorcaro was arrested at São Paulo airport the same day.

Brazil’s deposit insurance fund (FGC) faces a record R$41 billion payout to 1.6 million creditors. Federal police identified links between the bank and organized crime networks, and investigations into political connections — including ties to former officials — are ongoing.

What is the Mercosur–EU trade deal, and when was it signed?

The EU–Mercosur Partnership Agreement was formally signed in Asunción, Paraguay, on January 17, 2026, after more than 25 years of negotiations. EU member states approved the deal by qualified majority on January 9, 2026.

The agreement creates a free-trade zone covering 718 million people and USD 22.4 trillion in combined GDP, with gradual tariff elimination on ~95% of goods. For Brazil, the EU is its second-largest trade partner, with bilateral trade of ~USD 95.5 billion in 2024.

Final ratification requires approval by the European Parliament and Brazil’s Congress.

What is Lula’s Amazon deforestation record?

Under Lula, Amazon deforestation has declined for three consecutive years (2023, 2024, 2025), totaling a 50% reduction compared to 2022 levels. In the 12 months ending July 2025, INPE recorded 5,796 km² cleared — an 11% year-on-year drop and the third-lowest rate since records began in 1988.

The government has pledged zero deforestation by 2030. Critics note a contradiction: in late 2025, Petrobras received a license for exploratory drilling near the Amazon river mouth.

Who is the main opposition candidate against Lula in 2026?

The primary opposition candidate is Senator Flávio Bolsonaro (PL), chosen by his father, former President Jair Bolsonaro, who is currently incarcerated. São Paulo Governor Tarcísio de Freitas — the candidate preferred by markets and initially favored by the right — decided not to run for president, opting instead to seek re-election as governor.

As of April 2026, multiple polls show Lula and Flávio Bolsonaro in a statistical tie in hypothetical second-round scenarios.