Three other Lula vetoes to the LDO were also overturned; one of them prevented donations of goods in an election year
This Thursday (May 21, 2026), the National Congress overturned 4 of the president’s vetoes to the LDO (Budget Guidelines Law) of 2026. Two of them prevented the transfer to defaulting municipalities and the donation of goods to city halls during the electoral period.
The main change affects paragraph 4 of article 98. Before the overthrow, city halls that had restrictions on the Cauc (the federal government’s defaulter registry) were prevented from signing agreements or receiving resources from parliamentary amendments until they settled their outstanding issues.
With the new rule, municipalities with up to 65,000 inhabitants will now receive these funds and material donations even if they have the “dirty name”. In practice, if a small city has an accumulated social security debt, the federal government will no longer be able to stop the sending of resources for local works or the transfer of inputs.
The overthrow was articulated by mayors and congressmen, mainly from Centrão. This is because, in an election year, Lula’s veto would prevent deputies and senators from transferring resources to allocate resources to their electoral strongholds in search of votes.
Another veto prevented the transfer of assets during the election. Under common electoral law, the government is already prohibited from distributing these items free of charge to ensure equality between candidates.
In the LDO, Congress included a provision that determined that donations that contain a “charge” – that is, a consideration or obligation for the recipient – would not constitute non-compliance with the law.
For example, the delivery of ambulances or tractors to a municipality, if the donation term requires the city hall to pay for the maintenance of the vehicles, the act is no longer considered irregular by the LDO even in the period before the election. This section was resumed with the veto being overturned.
The other 2 vetoes concern the transport sector. The Executive’s veto restricted the federal Budget to expenses under the exclusive jurisdiction of the Union, prioritizing federal highways (BRs).
Now, the use of funds from the Union and parliamentary amendments for the construction and maintenance of highways in States and municipalities is authorized, as long as they are justified for the flow of production or integration of transport.
The other allows federal resources to be directed directly to works and improvements in the Brazilian waterway network, such as dredging and signaling services for rivers managed by States and municipalities.
