Lula government projects a 96% drop in non -mandatory expenses by 2029

The Lula Government (PT) economic team projects a drastic drop in discretionary expenses – so -called non -compulsory expenses – over the next four years. According to the proposal of the 2026 Budgetary Guidelines Law (LDO), presented on Tuesday (15), this type of expense should drop from R $ 221.2 billion in 2025 to only R $ 8.9 billion in 2029-a 96%retraction.

Economists emphasized that the numbers show a budgetary choke with the potential to paralyze the public machine after Lula’s current term. Discretionary expenses encompass public investments, state machine cost and the payment of parliamentary amendments. In practice, the cut signals that, if there are no changes in the tax framework or constitutional rules review, the government will be out of margin to implement new public policies or maintain basic services from 2027 – year immediately after presidential elections.

According to official projections, the amount available for this type of expense will go from R $ 208.3 billion in 2026 to R $ 122.2 billion in 2027. The fall trend is accentuated in the following years, until reaching the historical floor of R $ 8.9 billion at the end of the decade. The scenario was classified as a “compromising” by the Federal Budget Secretary, Clayton Montes, who warned: “This would already compromise the realization of public policies.”

I want my wallet

The account, however, will not necessarily be paid by Lula. If he does not run for reelection – or lose – the tax burden may fall on the next president. The scenario also exposes a political impasse: the conciliation between the fiscal responsibility goals provided for in the new framework approved by the PT government in 2023 and the maintenance of constitutional health and education floors, which grew again with the end of the spending ceiling.

Another factor that pressures accounts from 2027 is the return of precatory accounting within the tax rules. By 2026, these judicial debts are outside the calculation of the primary result, by decision of the Federal Supreme Court. But from 2027, the precatory – which should add R $ 516 billion by 2029 – will return to the center of the tax equation, further reducing the space for discretionary spending.

Parliamentary amendments, which today consume a significant part of non -compulsory funds, aggravate the situation. According to LDO’s proposal, the values ​​for these amendments should reach R $ 52.9 billion in 2026, R $ 56.5 billion in 2027, R $ 57.9 billion in 2028 and R $ 61.7 billion in 2029. From that last year, there will be “negative balance” – that is, there will be no more free resources or to play what Congress has already allocated.

The government acknowledges that the framework will require “revenue increase measures” and a “rigid allocation review” to preserve the minimum state of operation of the state. The debate is already beginning to mobilize parliamentarians of the base and opposition, which see in the emptying of discretionary expenses a threat to governability, the execution of social policies and political control over the budget.