By Mel Rodrigues
Brazil's Senate voted 68 to 0 on Wednesday, November 11, 2026, to approve a bill that keeps the Fust fund, the Universal Telecommunications Services Fund, out of reach of government spending freezes. The same bill extends the Fust Direto program until December 31, 2031. The text now goes to sanction, the final step before it becomes law.
Under the bill, spending on programs approved by the fund's Management Council (Conselho Gestor) can no longer be limited through restrictions on budget commitments and financial transfers. In practice, the money collected stays locked into approved projects even when the government, based at the Planalto presidential palace, needs to balance its accounts.
What the bill does
Fust Direto works as follows: telecom companies reduce their contributions to the fund in exchange for carrying out projects approved by the Management Council. The bill also amends the Fiscal Responsibility Law (Lei de Responsabilidade Fiscal), Brazil's main law governing public finances, to protect these expenses from spending freezes, known in Brazil as contingenciamento.
The bill requires that at least 50% of the fund's annual revenue go to non-reimbursable support, and it gives priority to connecting public schools, especially those outside urban areas.
Cost to taxpayers
The bill's own text acknowledges that the extension means a loss of tax revenue. The estimate is R$ 465.6 million (Brazilian reais) per year, or R$ 1.39 billion (Brazilian reais) over the three-year period from 2027 to 2029.
Critics note that this money will not reach the public treasury at a time when the government of President Luiz Inacio Lula da Silva, leader of the Workers' Party (PT), is patching its budget together one fix after another. By shielding the spending from freezes, Congress takes away a classic tool of budget control and ties the budget to a long-term commitment.
What the telecom industry says
Conexis Brasil Digital, the association representing telecom companies, says Fust Direto brought internet to more than 17,000 public schools in 2024 and 2025. Counting all the fund's modalities, more than 20,000 schools were connected. The program also provided phone coverage to 679 communities, and the connection of about 2,000 basic health units was approved with Fust funds.
The association estimates that keeping Fust Direto could unlock about R$ 2.5 billion (Brazilian reais) in new projects for schools, health units and areas with infrastructure gaps. It argues that without the extension, investment would stop. It also says a spending freeze would not reduce the contributions companies pay and would not produce real savings for the government, only limit how the money is used for universal access projects.
Background: why the fund matters
The Fust is financed by contributions from telecom companies and is meant to expand connectivity to places the private market does not reach. In 2026, when the Management Council approved the largest volume of funds in the program's history, the Fust accounted for 0.02% of the federal budget (Orcamento Geral da Uniao).
Supporters and critics agree that bringing internet to schools is a worthy goal. The debate is over how much it costs, who pays and who oversees the spending. With the money now protected by law, the fund is beyond the reach of year-by-year budget control. The Management Council and oversight bodies will now have to show, project by project, that every real of revenue waived comes back as connectivity.
VDD Analysis
Bringing the internet to schools is a legitimate cause, and the figures presented by the sector deserve attention. But taxpayers need to see the full picture: R$ 1.39 billion (Brazilian reais) in tax revenue waived, a fund shielded from spending freezes, and a mechanism that shifts to the state the job of overseeing billions in private investment. The more public money is locked in by law, the less room remains for setting priorities and for the fiscal discipline the country badly needs.
