Bill seeks to remove R$ 10.5 billion in diesel subsidies from the fiscal target

The federal government has proposed excluding up to R$ 10.5 billion in diesel subsidy expenses from the calculation of the 2026 fiscal target. The measure is part of the fiscal adjustment package presented to the National Congress this Wednesday (11), through a complementary bill filed by Senator Jaques Wagner (PT-BA), but drafted by President Luiz Inácio Lula da Silva's economic team. In practice, the proposal allows the government to disregard these expenses when assessing compliance with the primary result target. This does not mean, however, that the expenses will cease to exist. The funds will continue to be paid and will have an impact on public accounts and the country's debt. What changes? Currently, subsidy expenses authorized by extraordinary credits are already outside the regular spending limit of the Budget, but they still count toward the fiscal target calculation. The bill creates an exception so that up to R$ 10.5 billion earmarked for subsidizing diesel producers and importers will also be removed from this calculation. In practice: The government will continue paying the subsidies; Up to R$ 10.5 billion will be excluded from the fiscal target calculation; The spending will continue to impact public accounts. The measure applies exclusively to the 2026 fiscal year and depends on approval by Congress. Rising fuel prices The subsidies were expanded by the government to contain rising fuel prices, driven by the appreciation of oil on the international market amid the war in the Middle East. In September, the Executive branch released R$ 6.6 billion in extraordinary credits. In October, it authorized another R$ 7.5 billion, totaling R$ 14.1 billion. Part of that money, however, was also allocated to other subsidy programs. The last extension of the benefit occurred on October 27, for another 30 days. The estimated cost for this period is approximately R$ 10.5 billion. Since March, the price containment policy has also come to include measures related to gasoline and ethanol. According to government estimates, the set of subsidies and tax exemptions could cost around R$ 60 billion in 2026. Oil revenue To finance the benefits, the government intends to use the increase in revenue related to the appreciation of oil. According to the National Treasury, the federal government is expected to obtain R$ 64.6 billion in additional revenue this year, from royalties, special participations, oil sales, and export taxes. Created in March, the 12% tax on oil exports collected R$ 15.8 billion between March and October. The forecast is to reach approximately R$ 22 billion by December. The levy was extended until December 31. Fiscal package During a hearing at the Joint Budget Committee (CMO) this Wednesday, the Minister of Planning and Budget, Bruno Moretti, stated that the fiscal adjustment package is expected to have an estimated impact of R$ 60 billion in 2027. Among the planned measures are the review of tax benefits, limits on tax offsets, and new possibilities for containing expenses. The removal of diesel subsidies from the fiscal target, however, has drawn criticism from experts, who point to the risk of weakening the mechanisms for controlling public accounts. The proposal does not represent savings, but rather a loosening of the fiscal rule: the government will be able to carry out these expenses without up to R$ 10.5 billion being considered in the verification of compliance with the 2026 target.