Budget crisis put regulatory agencies on the brink of collapse

Brazil’s regulatory agencies are braced for yet another year of budget shortfalls, raising alarms about their ability to oversee critical sectors such as aviation, sanitation, transportation and energy. The latest budget guidelines from the Finance Ministry are expected to show cuts of up to 7% in 2026, even after a series of freezes in 2025 forced agencies to suspend services and lay off outsourced staff.

The crisis is serious enough that the Federal Accounts Court (TCU), Brazil’s top public spending watchdog, has launched an inquiry into how repeated funding squeezes are undermining the mandates of Brazil’s 11 federal agencies. “There is no doubt that we have a problem in Brazil today,” said TCU member Vital do Rêgo, who proposed the probe.

The TCU inquiry will analyze the impact of cuts across all regulatory agencies and could recommend binding measures to safeguard minimum funding levels.