On September 9, 2025, Constitutional Amendment No. 136/2025 was promulgated, introducing significant changes to the regime governing the payment of court-ordered government debts (precatórios) by the Union, the states, municipalities, and the Federal District. The purpose is to reconcile the obligation to settle such judicially recognized liabilities with the fiscal capacity of the federative entities, by establishing new limits, deadlines, and oversight mechanisms.
Key Amendments
- Federal Court-Ordered Debts: as of 2026, federal court-ordered government debts will no longer be included within the Executive Branch’s primary expenditure ceiling, thereby granting greater budgetary flexibility.
- States, Municipalities, and the Federal District:
- Annual payments will be linked to the stock of outstanding judicial debts in relation to Net Current Revenue (RCL).
- Stock up to 15% of RCL → minimum annual payment of 1%.
- Stock exceeding 85% of RCL → progressive increase up to 5%.
- Noncompliance triggers sanctions: judicially ordered account seizures, prohibition on receiving voluntary federal transfers, and liability for administrative misconduct.
- Social Security Debts: authorization for installment payment in up to 300 monthly installments for debts overdue as of August 31, 2025, conditioned upon adherence to the Social Security Regularity Program.
- Procedural Deadlines: the final deadline for submission of court-ordered debts is changed to February 1 (previously April 2). Debts submitted after this date will be scheduled for payment in the second subsequent fiscal year.
- Update Criteria: amounts will be adjusted by the IPCA (Broad Consumer Price Index) plus 2% annual interest, capped at the Selic rate whenever the latter is lower.
- Municipal Revenue Earmarking: temporary increase to 50% until December 31, 2026; from 2027 to 2032 the limit returns to 30%, with partial allocation of surpluses to health, education, and climate adaptation programs.
- Credit Lines and Use of Surpluses: public banks may provide financing for the settlement of court-ordered debts; part of the surpluses from federal funds may be allocated to environmental and climate projects until 2030.
Expected Impacts
The effects will vary depending on the actor involved. For federative entities, the reform brings greater predictability in budgetary planning, although accompanied by stricter controls and the risk of sanctions in case of default. For the federal government, the exclusion of court-ordered debts from the expenditure ceiling creates short-term fiscal space, but part of these amounts will again be incorporated into the budgetary framework as of 2027. For creditors, the changes may result in adjustments to both the timing and amounts effectively received, given the new deadlines and update criteria.
Conclusion
In sum, Constitutional Amendment No. 136/2025 seeks to balance the need to ensure the enforceability of judicial decisions with the fiscal sustainability of public entities, by imposing discipline, clearer deadlines, and oversight instruments designed to render the system of court-ordered government debts more predictable and controlled.