Brazil Plans Fiscal Target Bill After Rout

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Brazil’s finance minister says a new bill will push the budget toward its target. The plan follows Monday’s market rout after the election.

Brazil is preparing a bill to steer its budget toward its fiscal target, Finance Minister Dario Durigan said on Tuesday, 27 October. The Brazil fiscal target plan follows a day when stocks fell 13.88%.

Brazil is Latin America’s largest economy, and many US funds hold its shares, bonds and New York-listed companies. Durigan gave no text or timetable for the bill.

A fiscal target is the budget result a government promises for the year, counted before interest on its debt. Brazil calls it the primary result, and a surplus means revenue is higher than spending.

Durigan spoke to reporters at the Finance Ministry on Tuesday morning. He said the government would take a bill to Congress so that it can pursue the centre of the target.

“We will seek the centre of the target,” he said in Portuguese. He said the bill would give the government legal tools so that there is no doubt about that aim.

Durigan described the measure as a complementary bill, a type of law that needs an absolute majority in both houses of Congress. He did not describe its content or say when it would be sent.

He added that other measures are being studied. He said President Lula would first choose his team, and that the team would then present the adjustment measures.

Brazil’s fiscal framework, in force since 2023, sets a yearly target with a tolerance band of 0.25 points of GDP either side. The goal counts as met if the result ends inside that band.

Congress approved the 2026 budget guidelines law on Thursday, 4 December 2025. It sets a surplus of 0.25% of GDP, about 34 billion reais (about US$6.4 billion).

That law also lets the government use the lower edge of the band when it decides how much spending to freeze. Aiming for the centre instead would demand a bigger budget effort.

The 2027 target is higher, at a surplus of 0.5% of GDP, or 73.2 billion reais (about US$13.7 billion). The band floor is 36.6 billion reais (about US$6.9 billion), under the 2027 guidelines bill sent to Congress in April.

Durigan did not say which year his bill covers. The 2027 bill lets it deduct 65.66 billion reais (about US$12.3 billion) of costs, such as court-ordered payments.

On Monday, 26 October, the first trading day after the runoff, the Ibovespa, Brazil’s main stock index, fell 13.88%. The dollar rose about 8% to close near 5.40 reais; Brazil’s central bank said its official daily rate rose 9.2% to 5.50.

Durigan called the moves a change of positions, not a loss of trust in public accounts. He said the market had been betting on the victory of a particular candidate.

Investors had expected Flávio Bolsonaro, a conservative senator and son of former President Jair Bolsonaro, to win and cut spending. Lula won the Sunday, 25 October runoff and begins his new term on 5 January 2027.

The National Treasury, which manages Brazil’s public debt, also bought back bonds on Monday. It offered up to 15 billion reais (about US$2.8 billion) of fixed-rate bonds due in 2031, 2033 and 2037.

It bought about 7.1 billion reais (about US$1.3 billion) of those bonds and a similar sum of inflation-linked bonds. Durigan said the buyback helped bring stability to the market.

American investors in Brazil funds and in New York-listed shares of Brazilian companies felt the rout. The bill’s wording will show how firmly Lula’s next government intends to hold spending in check.

A weaker real also makes Brazil cheaper for US visitors, but it raises costs for Brazilian firms that owe dollars. Read the Monday market report and the election results for the background.

For wider context see the guides to the Brazil stock market and to inflation, interest rates and the Selic . More is on the Brazil hub .

The content of the bill and the date it goes to Congress are not public. It is also unclear whether it targets 2026, 2027 or later years.

The size of any extra spending freeze is not known, nor whether the Treasury will repeat the buyback. Lula has not named his new economic team, so it is not known who will serve as finance minister from January.

Lula picks his team before the term starts on 5 January 2027, and Durigan said that team will present the measures. Congress must then pass the bill by an absolute majority.

The bill is a signal, not yet a spending cut. It does not by itself change the 2026 budget result.

It is the yearly budget result the government promises, before interest on debt. For 2026 it is a surplus of 0.25% of GDP, with a band of 0.25 points either side.

Today the government may aim for the lower edge of the band. Aiming for the centre would demand a bigger budget effort.

No. It is the primary result, which leaves out interest on debt, so it differs from the full deficit. Brazil’s 2026 goal is a primary surplus.

Durigan said investors had bet on a different winner and reversed their positions after Lula won. The Ibovespa fell 13.88% and the dollar closed near 5.40 reais.

Sources: Brazil Ministry of Finance, statements of 27 October ; National Treasury, buyback offers of 26 October ; Chamber of Deputies budget office, 2027 budget guidelines bill briefing ; National Congress, 2026 budget guidelines law ; B3 exchange, Ibovespa close of 26 October ; Central Bank of Brazil, exchange rate ; US$ figures use the central bank rate of 5.33 reais per dollar on 27 October (all accessed 27 October 2026).

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