R$ 18.6 billion: that is the surplus Brazil's federal government projects for its own accounts in 2027, the first positive balance after four straight years of deficits, under the budget proposal sent to Congress on Monday (Aug 31). For household budgets, the figure matters because spending more than it collects pressures interest rates and public debt, and high rates make credit and consumption more expensive, as G1 reports. The promise is modest: it equals 0.13% of GDP, a little over one cent for every R$ 10 the country produces in a year.

The target is in the 2027 annual budget bill (PLOA), delivered to Congress on Monday. It is the last budget proposal of President Luiz Inácio Lula da Silva's third term, which began in 2023, and it will cover the first year of the successor elected in October's presidential vote, though Congress and the next government can still change it. Presenting the bill, Planning and Budget Minister Bruno Moretti said he trusts the delivery of the "full result", the entire surplus:

"We have full confidence that we can deliver this result in full. There is a smaller weight of mandatory expenses. We are not forecasting revenues that depend on congressional approval, because in other years we sent the budget bill along with other revenue measures. Here we are not counting on any new measure."

A blue target with loopholes that allow red

The target accepts shortcuts, according to G1. There is a tolerance band of 0.25 percentage point of GDP up or down, and R$ 65.7 billion in precatórios, court-ordered debts the federal government must pay, plus defense, health and education projects can stay outside the spending limit. In practice, the government could close 2027 with a hole of up to R$ 29.1 billion, larger than the promised surplus itself, without formally missing the target.

How it works: the indicator at stake is the primary result, the difference between what the government collects and what it spends, excluding interest payments on the debt. When more comes in than goes out, there is a primary surplus; when more goes out, there is a deficit. Interest on the debt added up to R$ 1.16 trillion in the twelve months through June, more than R$ 3 billion a day, according to Central Bank data cited by CNN Brasil; the entire surplus promised for 2027 would cover less than six days of that bill.

A recent history of deficits and the debt bill

Red ink has been the recent rule for federal accounts. The last positive year was 2022, a result analysts consider one-off, propped up by a constitutional amendment that delayed precatórios and by extraordinary dividends from state-owned companies, G1 reports. The fiscal rule approved in 2023 promised balance from 2024, targets were loosened in 2024, the official projection still points to a deficit in 2026, and the Transition Amendment of 2022 added about R$ 170 billion in annual spending.

The Independent Fiscal Institution (IFI), the Senate body that audits public accounts, estimates that annual surpluses of 2.1% of GDP, roughly 16 times the promised figure, would be needed just to stop the debt from growing. Gross debt is near 82% of GDP, the highest level since the pandemic, after rising more than 10 percentage points since 2023, according to CNN Brasil. That is why, in the October campaign, the government plans of the presidential candidates call for adjustment and a return to surpluses, as G1 reports.