Primary expenditures that fall outside the spending cap of the brand new fiscal framework, excluding constitutional transfers, rose 27.7% within the 2026 Annual Budget Bill (PLOA) submitted by the Executive to Congress final Friday (29), in contrast with this 12 months’s budget invoice.
This improve is pushed, amongst different elements, by the Judiciary, which can have a part of its bills excluded from the cap, and by the enlargement within the variety of Science and Technology Institutions (ICTs), that are additionally exempted from the spending rule. ICTs embrace statistics, patent, standardization companies.
In complete, the 2026 PLOA initiatives R$174.4 billion in major spending not topic to the cap, excluding constitutional transfers from the Union to states and municipalities. That determine is greater than the R$136.6 billion projected on this 12 months’s budget proposal. The complete contains expenditures already exempted by the complementary regulation that established the brand new fiscal framework two years in the past, in addition to most court-ordered debt funds (precatórios), which can stay outside the fiscal guidelines till 2026 beneath a 2023 Supreme Court determination.
The main change for 2026 is the enlargement of the listing of exceptions, with the inclusion of Judiciary bills and the rise in ICTs. Specialists and budget technicians see this improve as problematic, because it opens extra loopholes—past these already allowed beneath the fiscal framework—for spending outside the cap, which was designed exactly to regulate the expansion of public expenditures and assist rein in rising public debt.
The PLOA initiatives that the Judiciary will spend R$2.644 billion outside the cap subsequent 12 months. This new exemption stems from an April determination by the Supreme Court, which dominated that courtroom expenditures funded with “own revenues or from agreements, contracts, or similar instruments, as well as collected fees and charges” needs to be excluded from the cap, since they can’t be topic to budget restrictions.
To create this exemption, the justices relied on a loophole within the framework that had already exempted expenditures funded with personal revenues from federal public universities, federal establishments, federal state-owned hospital service suppliers, and scientific, technological, or innovation foundations. The determination got here in response to a lawsuit filed by the Brazilian Magistrates Association (AMB).
That identical loophole has additionally been utilized by authorities companies and different branches to safe spending outside the ceiling. The PLOA initiatives R$2.775 billion in expenditures from Science and Technology Institutions (ICTs) and Federal Education Institutions (IFEs) to be outside the cap in 2026. In 2025, this exemption was already included within the PLOA at R$2.145 billion, however the complete for subsequent 12 months is about to extend 29%, as extra public our bodies set up ICTs to bypass the spending restrict.
“The increase is partly explained by new organizations recognized as ICTs, such as the Federal Audit Court [TCU],” the Ministry of Planning and Budget (MPO) mentioned in a press release to Valor. The ministry added that it doesn’t have information damaged down by ICT or IFE and is “studying a better way to make this information available on the Budget dashboard later this year.”
In response, the TCU mentioned its recognition as an ICT “aims to strengthen its technical role by promoting applied research, innovation, and modernization of oversight methods.” The courtroom added that “the measure is aligned with current legislation (Law No. 10.973/2004 and Law No. 13.243/2016) and has no relation to fiscal rule flexibility, nor does it affect the court’s commitment to fiscal responsibility and integrity in the management of public resources.” The courtroom additionally identified it already operates the Serzedello Corrêa Institute (ISC), its greater schooling faculty.
In complete, six ICTs have expenditures excluded from the cap: the National Institute of Information Technology (ITI); the National Institute of Industrial Property (INPI); the Federal Audit Court (TCU); the Office of the Attorney General (AGU); the Institute for Applied Economic Research (Ipea); and the Brazilian Institute of Geography and Statistics (IBGE).
Alexandre Andrade, director of the Independent Fiscal Institution (IFI), is among the many specialists involved about this development of increasing major expenditures outside the cap. “In the Judiciary’s case, nothing prevents other agencies and branches from using the same argument—for instance, bills that seek to exclude expenditures by regulatory agencies funded with own revenues from any constraint under the fiscal framework,” the economist mentioned.
As Valor reported on Monday (1), Senator Laércio Oliveira (Progressives Party, Sergipe) launched a invoice to exclude regulatory company expenditures funded with personal revenues from the cap. The proposal is at present beneath evaluation within the Senate’s Infrastructure Committee.
With respect to ICTs, Mr. Andrade defined that the problem lies within the regulation defining what qualifies as a science and know-how establishment. Universities are a well-defined instance of establishments that clearly match the rule, however others are being created with out a direct hyperlink.
“For now, the institutions classified as ICTs [Ipea, IBGE, AGU, ITI, TCU, and INPI] do not have significant own revenues. [But] this move could encourage other agencies—some with potentially much larger own revenues—to seek inclusion under this exception,” Mr. Andrade warned.
At a press convention final Friday, Planning and Budget Ministry Executive Secretary Gustavo Guimarães mentioned that within the case of ICTs and IFEs, there’s a recalculation of the cap’s baseline, which reduces the “net gain” of fiscal house opened outside the spending ceiling. In the Judiciary’s case, nevertheless, the Supreme Court’s determination blocked this recalculation—utilized for 2025 however now not attainable—leaving your complete quantity outside the fiscal rule.