# The first major test for Lula 4.0

The revision of the 2027 Budget will show how the re-elected government intends to balance the books and respond to concerns about loan installments, groceries, rent and jobs.

- Columnist: [Marcello D'Angelo](https://ceoone.com.br/en/columnist/marcello-dangelo)
- Published: October 27, 2026
- Address: https://ceoone.com.br/en/article/lula-first-major-test
- Em português: https://ceoone.com.br/artigo/o-primeiro-grande-teste-de-lula.md

![A paper bag of vegetables on a kitchen counter, beside a supermarket receipt, a set of keys and envelopes](https://pub-b80e49b2737940b3ab5d3f20d0578192.r2.dev/artigos/o-primeiro-grande-teste-de-lula.webp)

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## Key points

- The 2027 Budget, already before Congress, is the re-elected government's first major test: it will show how Lula intends to fund his campaign promises and tackle the fiscal imbalance.
- The 2027 proposal sets aside R$1.2 billion for rural insurance. According to FGV Agro, R$2.37 billion would be needed just to restore the coverage of 2021.
- The 2026 Budget was signed into law with about R$61 billion in congressional amendments, and the Chamber of Deputies estimates 2026 tax breaks at R$612.8 billion.

The re-elected government's first major test is already before Congress. It is the 2027 Budget. Its revision will show how Lula intends to fund the commitments made during the campaign, tackle the fiscal imbalance and create the conditions to expand jobs and income.

After the markets' reaction, the discussion acquired striking numbers and worrying projections. For most Brazilians, however, the problem has more familiar names: loan installments, groceries, rent and jobs. Budget choices also need to be judged by their capacity to respond to these demands.

The starting point calls for realism. The government needs to show how much it expects to collect, which expenses it intends to review and how it will accommodate the new promises. Optimistic forecasts are no substitute for available resources. Every expansion must state its cost and its source of funding.

The comparison with 2026 helps make this demand concrete.

For the supermarket sector, the Budget revision needs to consider the whole chain that brings food to the shelf. This year's Budget set aside R$1.53 billion to buy food from family farming and R$246.4 million for technical assistance. In 2027, these resources should be assessed together with investment in storage, transport and loss reduction. Supporting production and improving supply are also ways of tackling the cost of food.

Rural insurance needs to be part of this calculation. The 2027 proposal provides R$1.2 billion to subsidize its purchase. According to a study by FGV Agro reported by Canal Rural, R$2.37 billion would be needed just to restore the scale of protection reached in 2021. Beyond the amount, it matters that the money is available before the policies are taken out. Protection against climate losses helps preserve farmers' financial capacity to keep producing after a crop failure.

On jobs, the challenge goes far beyond training. Conditions must be created for employers to expand their operations and hire. The Budget revision should come with proposals to reduce the cost of formal hiring and the obstacles to productive investment. The OECD points to cutting non-wage labor costs as a way to reduce informality and improve job opportunities.

This also calls for choices on taxation: examining how to ease hiring, the purchase of equipment and the modernization of companies, with cost estimates and explicit offsets. Benefits must have goals, deadlines and an evaluation of results. Easing the tax burden on productive activity must be part of a fiscal reorganization that can be sustained.

This is where balanced public accounts connect with jobs. High interest rates make working capital more expensive, raise the cost of financing a machine and increase the minimum return required to open a shop or expand a factory. With uncertain demand, business owners may postpone investment, and the hiring that would come with it. This pressure reaches small businesses, suppliers and workers.

Training must keep pace with this dynamic. Before funding new courses, identify which companies and projects will need those workers. Then track how many graduates found jobs and improved their income.

A job, however, may remain out of reach for those who have nowhere to leave their children. In 2026, the budget line for basic education infrastructure and the building of early childhood schools received R$2.72 billion in authorized appropriations. For 2027, the priority should be to complete viable units and agree on their operation with the municipalities. A daycare center that is delivered needs staff, running costs and children enrolled.

On housing, the test will be how many families can actually stop renting. Giving priority to units close to completion, with sanitation, transport and access to work, can produce faster results. The cost of the house must be examined together with the cost of living at that address.

For the middle class and small business owners, loan installments deserve special attention. New credit programs need to spell out their cost to the Treasury and the beneficiaries' ability to pay. Renegotiating offers relief, but the sustainability of debt depends on income. Financing productive investment requires assessing demand, return and risk.

These priorities need to fit within the accounts. Congress will also have to take part in the choices. The 2026 Budget was signed into law with approximately R$61 billion in congressional amendments. For 2027, their allocation should be negotiated within a plan that favors feasible projects and services whose operation is guaranteed.

Another front is tax breaks, estimated by the Chamber of Deputies at R$612.8 billion for 2026. This money is not entirely available to be recovered. But the government must identify which incentives deliver results, which need to be redesigned and which have lost their justification. Reviewing each benefit requires presenting its effects on revenue, prices and jobs.

The fiscal effort will be judged by its consistency and by how its costs are shared. Preserving privileges while squeezing services and investment would weaken the social case for the adjustment.

Lula's first major test will be to present a Budget that can be carried out and to explain its choices clearly. Families need the conditions to pay their installments and do the monthly shopping. For that, they also need an economy in which investing, hiring and working offer prospects of a better income.

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