Last Tuesday, September 9, the National Congress promulgated Constitutional Amendment No. 136 (“EC No. 136/2025”), stemming from the so-called “PEC dos Precatórios.” EC No. 136/2025 introduces new rules regarding the payment regime of precatórios—debts owed by the Federal Government, states, and municipalities arising from lawsuits with final judicial sentences—with the aim of easing budgetary pressures on the Federal Government, States, and Municipalities. This change will have significant repercussions across various sectors. For investors in judicial credits, the new regulatory framework impacts the pricing dynamics of these assets and the strategy of portfolio origination.
Main points of EC No. 136/2025
EC No. 136/2025 modifies the payment regime for judicial debts of the Public Treasury, seeking to balance compliance with court rulings and fiscal equilibrium. Key changes include:
- Exclusion from the primary expenditure cap: from 2026 onward, Federal precatórios will no longer be counted within the primary expenditure ceiling, enhancing budget predictability and freeing estimated fiscal space of R$ 12 billion for that fiscal year.
- Gradual reincorporation into fiscal targets: starting in 2027, 10% of the precatório stock will be included in the fiscal targets established by the Budget Guidelines Law, with this proportion increasing progressively until full inclusion.
- Staggered payments for States and municipalities: federative entities must settle overdue precatórios based on the size of their stock relative to their Net Current Revenue (RCL). If the debt represents up to 15% of the previous year’s RCL, the minimum annual payment is 1% of revenue. The greater the stock, the higher the required percentage, reaching up to 5% of RCL when the debt exceeds 85% of revenue. This system may effectively lead to installment payments or deferment of part of the precatórios depending on each entity’s financial capacity. Furthermore, beginning in 2036, if outstanding balances remain, these percentages will increase by 0.5 percentage points every subsequent decade.
- Change in adjustment for inflation: amounts will now be adjusted by the IPCA (Brazilian Consumer Price Index), plus simple interest of 2% per year. If this adjustment exceeds the Selic rate over the same period, the Selic rate will apply instead.
- Renegotiation of social security debts: States, the Federal District, and Municipalities may renegotiate social security debts in up to 300 monthly installments, extendable by an additional 60 installments, with each installment capped at 1% of the RCL, updated by the IPCA plus up to 4% annually.
- Credit lines and budgetary flexibilization: the Federal Government is authorized to provide financing through public banks to entities whose precatório stock exceeds the average RCL commitment over the last five years. Additionally, the use of 2025 supplementary credits in calculating spending limits from 2026 onwards is permitted, expanding fiscal space.
Repercussions
EC No. 136/2025 significantly alters the predictability for creditors of judicial debts owed by the Public Treasury. In the medium and long term, it creates a deferred liability that may increase pressure on public finances. Thus, although EC No. 136/2025 responds to an immediate need for fiscal adjustment, it also reinforces the challenge of balancing fiscal sustainability with the effective enforcement of court decisions and the protection of creditors’ legitimate expectations.
On the day EC No. 136/2025 was promulgated, the Brazilian Bar Association (OAB) filed legal proceedings (Direct Action of Unconstitutionality – ADI) with the Federal Supreme Court (STF). The OAB requests a precautionary suspension of the Amendment’s effectiveness, arguing that its text violates certain unamendable clauses of the Federal Constitution by allowing the indefinite postponement of judicial debts with a very low annual cap insufficient to settle the debts, and without a clear settlement horizon.
Our Dispute Resolution and Special Situations teams are closely monitoring the developments related to EC No. 136/2025 and the ADI challenging it before the STF, and are available for discussions.
