A set of eight programs recently created by the federal government should inject R$88 billion into the economy by the end of 2026, helping with President Luiz Inácio Lula da Silva’s (PT) electoral aspirations, but with two direct effects on the Brazilian economy: a fiscal boost, putting pressure on inflation, and the increasing difficulty in controlling public finances.
The calculation was prepared by BTG Pactual and appears in a report distributed to customers this Monday (26). Partly thanks to this impulse, the financial institution projects GDP growth of 1.7% this year — the estimate for last year is 2.2%.
In total, eight programs are mentioned:
- Private payroll loans: R$24 billion;
- IR exemption for those earning up to R$5,000: R$31 billion;
- People’s Gas: R$1.6 billion;
- Luz do Povo: R$4.3 billion;
- Casa Brasil renovation: R$ 13.9 billion;
- Track 4 of Minha Casa, Minha Vida: R$7.7 billion;
- New real estate credit model: R$22.3 billion;
- Withdrawal – FGTS anniversary: - R$ 16.7 billion (negative).
“A series of programs with no primary impact should come into force, maintaining the fiscal impulse higher than in 2025. We monitor a total of R$88 billion in new income transfer and credit measures”, states an excerpt from the report.
“Of this total, R$33 billion has a primary impact (the IRPF exemption and the Gás do Povo program), while the remaining R$56 billion does not directly affect the primary result, as they are initiatives such as Faixa 4 of the MCMV, credit for renovations, subsidy on the electricity bill, new model of real estate credit and private payroll loans. The new rules for credit operations guaranteed by the FGTS anniversary withdrawal should reduce these operations.”
BTG Pactual assesses that the fiscal space “seems less restrictive” than in previous years and expects compliance with the primary result target, when discounting exceptions to the framework and the lower limit of the objective.
“Extraordinary revenues, such as dividends from state-owned companies, oil auctions and tax transaction agreements, should play a relevant role in this result”, says the report.
Despite the temporary relief in the space for discretionary expenses, according to BTG Pactual, the structural factors that drive the increase in mandatory spending remain present.
“The linking of benefits to the minimum wage, the indexation of health and education expenses to revenue, the aging of the population, poorly focused eligibility rules, in addition to the high degree of judicialization, continue to fuel a dynamic of expansion incompatible with the limits established by the fiscal framework”, concludes the report.
The financial institution projects gross debt growth to 82.1% in December 2026 — an increase of 10.4 percentage points in the current presidential term.
“In addition to being unsustainable in the medium term, the real growth of 2.5% per year in the expenditure limit is inconsistent with the stabilization of public debt, unless the adjustment occurs almost exclusively on the revenue side, an alternative limited by the already high level of the tax burden.”
