Macroeconomic conditions define who invests and who waits in Brazil's infrastructure through 2026

Brazil is heading toward a historic record in infrastructure investment. According to the Brazilian Association of Infrastructure and Basic Industries (Abdib), the country is expected to reach R$300 billion in sector investments in 2026. The figure is impressive, but a superficial reading of the number conceals a tension dynamic between macroeconomic variables that, combined, can either accelerate or stall project execution over the next 18 months.

The backdrop is well known: restrictive monetary policy, pressured exchange rate, tax reform in the implementation phase, and an electoral cycle already shaping regulatory decisions. The central question for investors, operators, and public policymakers is how each of these forces transmits, in differentiated ways, to the subsegments of energy, sanitation, transportation, and digital infrastructure.

What is the real impact of the Selic rate and exchange rate on different infrastructure subsegments?

The financial market expectation for the Selic rate at the end of 2026 is 12.25% per year, according to the Focus Bulletin from the Central Bank of Brazil, released in February 2026. The projection for the exchange rate remains at R$5.50 at the end of 2026 and 2027, according to the same source. These two parameters form the backbone of any financial modeling for long-term projects.

A double-digit Selic increases the cost of equity and debt capital, compresses the internal rates of return (IRR) of concessions and PPPs, and raises guarantee requirements from financiers. The effect, however, is uneven across subsegments.

Basic sanitation leads infrastructure investment intentions in Brazil, concentrating 49.2% of intentions, followed by highways at 47.8% and electricity at 38.5%, according to the Infrastructure Barometer, a survey conducted by Abdib in partnership with EY-Parthenon, published in January 2026. The robustness of the sanitation sector stems largely from its consolidated regulatory framework and tariff predictability, which offer partial protection against interest rate fluctuations. Highways, in turn, depend heavily on traffic and, therefore, on the pace of economic activity, making them more sensitive to a GDP projected at 1.80% for 2026, according to the Focus Bulletin.

The electricity sector, especially in renewables, faces dual pressure: the cost of imported equipment rises with the exchange rate at R$5.50, while long-term financing becomes more expensive. The attractiveness of solar and wind projects remains high due to the structural demand for decarbonization, but the financial viability of each individual project requires finer calibration.

Digital infrastructure, although with shorter investment cycles than highways or sanitation, also feels the weight of the exchange rate. A large share of fiber optic network and data center equipment is denominated in dollars, which pressures capex in reais.

Differentiated sector-level analysis is essential to avoid generalizations. The macro scenario calls for caution, but each infrastructure vertical responds with distinct intensity to the same variables.

How does the tax reform alter the viability equation for projects and PPPs?

Complementary Law No. 214/2025 regulates the consumption tax reform, establishing the Tax on Goods and Services (IBS), the Contribution on Goods and Services (CBS), and the Selective Tax (IS). The legislation gradually phases out taxes such as PIS/Cofins, ICMS, and ISS, with the transition phase beginning in 2026.

For the infrastructure sector, the reform represents a structural change in how tax costs are distributed along the value chain. The end of tax cumulativeness, a central principle of the new system, promises greater efficiency in resource allocation and logistics. Consolidated special regimes, such as the Special Incentive Regime for Infrastructure Development (Reidi), are undergoing redefinition, generating short-term uncertainty about the tax treatment of projects already in structuring.

The tax transition is simultaneously an opportunity for competitiveness gains and an operational risk factor. Concessionaires operating across multiple states, such as those in highways and energy transmission, face additional complexity in the coexistence of the old and new systems during the migration period. Municipal and state PPPs need to revise economic-financial equilibrium models to reflect the new tax burden.

Regulatory clarity in the implementation of CL 214/2025 will be a watershed for investor confidence. Each month of normative ambiguity represents additional structuring costs and can postpone investment decisions at a time when the country needs acceleration.

2026 electoral cycle and private capital: how are investors recalibrating their theses?

The proximity of the 2026 presidential elections introduces a political variable that permeates all capital allocation decisions in infrastructure. Historically, Brazilian electoral cycles produce two simultaneous effects: acceleration of concessions and auctions in the 12 months preceding the vote, as a way to consolidate legacy, and caution from long-term investors who await clarity on the continuity of sectoral policies.

The private sector is expected to account for 72.2% of the total amount invested in infrastructure in Brazil by the end of 2025, according to data from the National Confederation of Industry (CNI), published in June 2025. This significant private capital participation means that the perception of political and regulatory risk has a direct impact on the effective volume of investments.

Institutional investors, pension funds, and private equity managers in infrastructure operate with horizons of 15 to 30 years. For these players, the question is not just who wins the election, but what the regulatory agenda of the next government cycle will be for sectors such as sanitation, energy, and transportation. The stability of the sanitation framework, the continuity of transmission auctions, and highway tariff policy are variables that weigh as much as the interest rate in capital allocation decisions.

Foreign funds, which traditionally account for a significant share of infrastructure project financing, face the combination of a depreciated exchange rate and high interest rates with mixed prospects. On one hand, Brazilian assets become cheaper in dollars, increasing attractiveness for international buyers. On the other, the cost of currency hedging and volatility reduce the predictability of returns in hard currency.

Foreign appetite for Brazilian infrastructure depends less on the absolute level of interest rates or exchange rates and more on the perception of institutional consistency and regulatory predictability over time.

What is at stake for the next 18 months

The convergence of macroeconomic, tax, and political factors creates a scenario that demands analytical sophistication from all players in the infrastructure ecosystem. The projected record of R$300 billion in investments for 2026 is achievable, but depends on the institutional environment's ability to send clear signals to the market.

Three conditions stand out as decisive. First, the trajectory of monetary policy: a firmer signal of Selic convergence toward levels below current ones can unlock projects currently on hold. Second, detailed regulation of the tax reform for the infrastructure sector must advance with speed and predictability, minimizing legal uncertainty during the transition. Third, the concession and auction agenda scheduled for 2025 and 2026 must maintain pace and technical quality, regardless of the electoral calendar.

Sector leaders, such as those participating in discussions promoted by the GRI Institute in its gatherings dedicated to the future of Brazilian infrastructure, have reiterated that Brazil's problem is not the absence of available capital, but the consistency of the business environment that allows transforming investment intention into executed projects.

The country faces a real window of growth in infrastructure. Seizing it requires that macroeconomic, regulatory, and political decisions operate in the same direction. Private and foreign capital is watching. The institutional response will set the pace.

This topic is part of the strategic agenda of the GRI Institute, which brings together infrastructure leaders, investors, and policymakers in gatherings dedicated to analyzing the drivers that shape sector growth in Brazil and Latin America.