Government weighs early funding for Brazil’s postal service
Correios faces mounting financial pressure as the government weighs new funding
Fabio Rodrigues-Pozzebom/Agência Brasil
The Lula administration’s economic team is assessing how to accommodate at least R$6 billion in capital that the federal government must inject by 2027 into Correios, Brazil’s state-owned postal service,Valor has learned.
The commitment is part of the contract for a R$12 billion loan secured by the company last year from five banks with a National Treasury guarantee.
One option under consideration is to bring forward part of the capital injection to 2026. Some members of the economic team favor allocating as much as possible this year.
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That would reduce the need for the government to propose additional spending cuts in other areas when drafting the 2027 annual budget bill, known as the PLOA, to make room for the payment.
Officials are calculating whether an early injection would be feasible and how much could effectively be accommodated in this year’s budget. The decision will depend on spending trends and on how the government chooses to allocate funds among discretionary expenditures, which can be cut more easily but are considered politically difficult to manage.
In its latest bimonthly revenue and expenditure assessment, the Planning Ministry reduced the amount of budget spending frozen by R$5.7 billion, bringing the total blockage down to R$17.9 billion. The move reflected a decline in projected mandatory expenditures subject to the spending limit.
Budget options
Another possibility would be to include only part of the capital injection in the 2027 budget bill and provide the remainder during the year through supplementary appropriations and freezes on other expenditures.
Under that scenario, the proposed budget would include less than R$6 billion, with the difference accommodated during its execution.
Officials have also considered leaving the injection entirely out of the PLOA and providing all the funds during the implementation of the 2027 budget. Some members of the government, however, argue that the budget proposal should at least signal the commitment.
Both strategies have raised concerns among some officials because the capital injection is a contractual obligation of the federal government and the budget is expected to reflect as closely as possible the estimated funding requirement. Issues of this kind are reviewed by the Federal Audit Court, or TCU.
Contract safeguards
The contract provides for the debt to become immediately due if the capital injections are not made, the restructuring plan is not carried out or Correios is privatized.
In 2025, the R$12 billion loan obtained by Correios was arranged by a syndicate comprising Banco do Brasil, Caixa Econômica Federal, Bradesco, Itaú Unibanco and Santander. The first three banks each lent R$3 billion, while Itaú and Santander provided R$1.5 billion apiece.
The requirement for the federal government to make a minimum capital injection by 2027 was included among the loan conditions to demonstrate to the banks the government’s commitment to restoring Correios’ finances.
The clause did not have the support of all members of the government but was ultimately included in the final agreement.
The contract also allows the lenders to demand early repayment if the planned capital injections are not secured, the restructuring plan is not implemented or the postal service is eventually privatized.
In those cases, the banks could call on the federal government’s guarantee, requiring the federal government to repay the debt.
Mounting losses
Correios ended 2025 with a loss of R$8.5 billion. The company lost another R$3.16 billion in the first quarter of this year, compared with a R$1.73 billion deficit in the same period of 2025.
That marked its 14th consecutive quarterly loss.
The company’s performance has prompted the TCU to step up its scrutiny of Correios’ measures and financing operations.
TCU officials believe the Treasury’s assessment of the new transaction should consider not only whether a restructuring plan exists, but also the pace of its implementation and whether the company’s actual results are consistent with its projections.
New financing
Correios plans to raise another R$7 billion this year with a federal guarantee through a transaction arranged by a consortium of international private banks operating in Brazil, as previously reported by Valor.
The deal marks a shift from the R$12 billion financing secured last year, which involved some of the largest financial institutions operating in the country.
The terms are expected to be similar to those of the 2025 transaction, which carried a cost of about 115% of Brazil’s interbank deposit rate, known as the CDI. That was below the National Treasury’s ceiling of 120% of the CDI.
