The proposals under discussion would change what happens when revenue falls short of forecasts. Under the current framework, spending freezes are generally temporary; the government is now considering reducing the following year’s spending base when a freeze remains in place through year-end. This year, Brasília froze R$13.65 billion, and the proposed approach would deduct that amount from the 2027 expenditure base if the restriction is maintained.¹

Accounts from across the political spectrum agree that the package is intended to give the government more durable control over expenditure and the debt path. The right-leaning account puts the emphasis on investor confidence, arguing that markets are seeking a credible adjustment plan after the real, interest-rate expectations and equities reacted negatively to doubts over fiscal management.² The left-leaning account likewise describes the measures as a response to pressure for clearer fiscal responsibility, but stresses the administration’s stated effort to portray discipline as necessary to sustain social programmes over the long term.¹

A second, more politically sensitive proposal would broaden the expenses that can be frozen. Officials are examining whether some mandatory outlays — including constitutionally protected health and education spending, social benefits and subsidies — could be subject to restraint, though the categories and legal limits remain unsettled.² The government is also studying greater flexibility to shift resources between health and education for states with different demographic needs, without formally merging their funding floors.¹

Both accounts also point to a shift in how the primary-balance goal is pursued: instead of treating the bottom of the tolerance range as the operational target, the executive would aim for its midpoint. For 2027, that would mean at least a R$8.5 billion primary surplus. The final decision rests with Lula, whose caution reflects the central trade-off: reassuring markets and strengthening the fiscal framework while avoiding measures seen as diluting campaign commitments.²