Brazil's federal government cut the amount of frozen funds in its 2026 budget on Thursday (Sept. 24). The freeze fell from R$ 17.9 billion to R$ 16.1 billion, according to the fourth bimonthly revenue and spending report released by the Planning Ministry. Taken together, the report's moves leave about R$ 1.9 billion available for ministries, according to news site G1.
The reduction combines two moves. The government unblocked R$ 15.5 billion from the "bloqueio," the mechanism Brazil uses when mandatory spending exceeds the cap set by its fiscal rules, because it now projects lower costs with pensions, the federal payroll and the BPC, a monthly benefit for poor elderly and disabled Brazilians. The remaining bloqueio stands at R$ 2.4 billion. In exchange, the economic team activated the "contingenciamento," a separate spending freeze used when the annual fiscal target is at risk, for the first time this year, locking up R$ 13.6 billion.
Pressure on the fiscal target
According to Folha de S.Paulo, the economic team had projected a primary surplus of R$ 10.8 billion for this year and now expects a deficit of R$ 13.6 billion, which required freezing the same amount. The Planning Ministry raised its estimate for the year's deficit from R$ 52 billion to R$ 67.3 billion, or 0.49% of GDP, G1 reported.
The 2026 target sets a primary surplus of 0.25% of GDP, about R$ 34.3 billion, with a 0.25-point tolerance band, so a zero result still counts as compliance. One of the revenue shortfalls involves the tax on dividends. Folha reports that the executive branch had insisted it would collect nearly R$ 29 billion from that source, a figure the TCU, Brazil's federal audit court, challenged in a warning to the government. The government also projects R$ 3.9 billion less in dividends from state-owned companies.
A retained margin and a R$ 40 billion fuel subsidy
Planning Minister Bruno Moretti said the R$ 1.9 billion will not go to the ministries right away.
"For now, I will not release it. I will examine the agencies' requests. It is prudent to keep a margin. This reserve serves the requests that come between one report and the next (...). The funds will be released if there is a need to do so," Moretti said.
Moretti also said, according to Folha, that the fuel subsidy planned for 2026 totals R$ 40 billion and is fully included in the report. The budget adjustment comes ten days before the first round of Brazil's presidential election. The decision on the retained margin now depends on the agencies' requests until the next bimonthly report.