Can Regulators Do More with Less? Brazil’s Federal Agencies Under Budget and Workforce Pressure

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A Brazilian parallel

One of the defining administrative initiatives of President Donald Trump’s second term was the effort to shrink the federal bureaucracy through the Department of Government Efficiency (DOGE). On February 11, 2025, the White House ordered executive agencies to hire no more than one employee for every four who left federal service and instructed agencies to prepare for large-scale reductions in force. A hiring freeze was then extended on April 17, 2025, and by October 15, 2025, the White House stated that the administration had already surpassed the four-to-one attrition target.

These measures were presented as efficiency reforms and as a way to reduce the footprint of regulation. But they also raise a broader question: what happens when governments seek to scale back regulatory effects through administrative action even though some of the intended changes would require statutory reforms that only Congress can enact?

Brazil’s federal regulatory agencies provide a useful answer. In institutional terms, these agencies resemble U.S. independent commissions more than cabinet departments: they regulate sectors such as electricity, telecommunications, civil aviation, mining, transportation, health surveillance, and water and sanitation. Over the last decade, their budgets declined, their workforce shrank, and yet their responsibilities kept expanding, both substantively and procedurally.

A recent report published by the Regulation in Numbers project at FGV Law Rio examines this trend using annual management reports from all 11 Brazilian federal regulatory agencies and budget execution data from the Federal Senate’s system. The findings suggest that prolonged administrative downsizing does not simply make regulators leaner. It can also make them less flexible and less capable exactly when regulatory demands are growing.

Expanding mandates, shrinking capacity

The central finding is straightforward. Between 2015 and 2024, the combined workforce of Brazil’s federal regulatory agencies fell from 11,175 to 9,483 employees, a reduction of roughly 15 percent. Over the same period, inflation-adjusted executed expenditures fell from R$7.0 billion to R$4.9 billion, a decline of nearly 30 percent (see Figure 1).

Figure 1. Indexed workforce and executed expenditures of Brazil’s federal regulatory agencies, 2015-2024

The contraction was widespread. Only two agencies increased their headcount: the National Water and Basic Sanitation Agency (ANA), whose workforce grew 24 percent, and the National Agency of Petroleum, Natural Gas, and Biofuels (ANP), where staffing grew 5 percent. By contrast, the National Mining Agency (ANM) lost 33 percent of its workforce, while the Brazilian Health Regulatory Agency (ANVISA) lost 26 percent.

The decline would already be significant if the agencies’ mandates had remained stable. But that was not the case. In recent years, Brazilian regulators have been called upon by policymakers and new legislation to tackle new challenges tied to energy transition, climate-related events, sanitation reform, and increasingly complex markets. At the same time, legislation enacted by Congress has subjected them to broader procedural obligations, including regulatory agendas, regulatory impact analyses, and more structured participation requirements. In other words, agencies were not only expected to regulate more sectors and more complex problems; they were also expected to regulate in more analytically demanding ways.

This is the central paradox revealed by the data. Agencies were pushed to deliver broader regulatory outputs with fewer people and less money. In June 2025, for example, the Electric Energy Agency (ANEEL) emitted a public warning that continued contingency measures could force the suspension of inspection activities, citizen-service functions, and training for new staff. That was not an isolated anecdote, but a visible symptom of a decade-long pattern.

Smaller budgets, less flexibility

The most important implication of this trend is not simply that agencies lost personnel. It is that budget compression made the remaining budget less manageable. Payroll is harder to reduce quickly than discretionary spending, so even when agencies reduce headcount, personnel spending can absorb a larger share of a shrinking budget. That is exactly what happened in Brazil. Although spending on active personnel fell in real terms over the period, the share of agency budgets devoted to personnel increased. By 2024, mandatory spending represented almost 70 percent of total spending across the 11 agencies, and personnel expenses alone accounted for 46.6 percent of total expenditures (see Figure 2).

Figure 2. Mandatory and personnel spending as shares of total expenditures, 2015-2024.

This matters because regulatory capacity depends on much more than salaries. Agencies also need room to finance inspections, laboratory and field activities, information technology, data systems, stakeholder engagement, and day-to-day administrative support. Once mandatory expenditures consume most of the budget, managers lose the flexibility to sustain these functions.

The data therefore point to a problem of institutional rigidity. Even as the federal government reduced staffing and total expenditures, it also reduced agencies’ margin of discretion. The result is a kind of hollowing out: agencies continue to exist formally, but the operational conditions needed for effective oversight become progressively harder to maintain.

Vacancies Turned into a Structural Constraint

The workforce data reveal another layer of the problem. Brazilian regulatory agencies were created with staffing structures defined mainly by statutes enacted more than two decades ago. Even those statutory staffing levels are now outdated, given the expansion of agency responsibilities. Yet the agencies have increasingly failed to fill even the positions already authorized by law.

Between 2015 and 2024, the overall vacancy rate in Brazil’s federal regulatory agencies rose from 21.3 percent to 28.7 percent, peaking at 28.9 percent in 2023. A growing share of legally authorized positions was left unfilled because of retirements, the long gap between civil service examinations, and the lack of systematic replacement. Before the hiring cycle that began in 2024, the last broad recruitment effort for the agencies’ technical careers had taken place in 2008.

This pattern weakens institutional memory and long-term planning. It also increases dependence on stopgap solutions, such as temporary contracts or staff borrowed from other public bodies. Those arrangements can relieve immediate pressure, but they do not solve the underlying planning problem.

Uniform cuts hide different agency realities

The aggregate numbers are important, but the agency-level patterns are even more revealing. As the data of Table 1 show, specific agencies dealt with the budgetary and personnel restrictions in substantially different ways. Our report identifies three broad trajectories.

Table 1. Agency-level changes in workforce, executed expenditure, and vacancy rate (2015-2024)

Note: Executed expenditure is expressed in inflation-adjusted terms in the underlying dataset.

In a first group of agencies, the decline in staffing roughly tracked the decline in total expenditures. This was the case for agencies such as ANAC, ANEEL, ANS, and ANVISA, where both personnel and budget contracted in the same general direction.

In a second group, the budget fell much faster than staffing. This is where the risks became sharper. At ANCINE, the workforce fell about 7 percent between 2015 and 2024, while inflation-adjusted expenditures fell 35 percent. At ANTT, staffing fell about 15 percent, while expenditures dropped 53 percent. ANP is the starkest case: its workforce increased 5 percent, but its budget fell 44 percent.

In those agencies, personnel costs came to occupy a much larger share of the budget. At ANCINE, personnel spending rose from 45.5 percent of total expenditures in 2015 to 60.2 percent in 2024. At ANTT, it rose from 23.1 percent to 36.2 percent. At ANP, it jumped from 32.8 percent to 52.9 percent. This does not mean these agencies were overstaffed. It means that budget compression hit non-payroll activities even harder.

ANA, meanwhile, followed a different path. Its workforce grew substantially because the agency absorbed new sanitation-related responsibilities and relied in part on staff transferred from other public entities, in addition to new hires. Yet even there, total expenditures still fell by more than 30 percent in real terms. The ANA case is a useful reminder that headcount alone is not enough to evaluate administrative capacity.

Conclusion

Brazil’s experience suggests that the sustainability of federal regulatory agencies should not be evaluated only in terms of payroll savings or headline reductions in headcount. The more relevant question is whether agencies retain the people, budget structure, and operational flexibility needed to perform their statutory functions in increasingly complex sectors. The evidence presented here points in the opposite direction: over the last decade, agencies lost staff, saw vacancies rise, and operated under sharper budget compression even as their responsibilities expanded.

For Brazil, the policy implications are straightforward. Federal regulatory agencies need more predictable budget conditions, a more systematic strategy for replacing departing staff, and long-term workforce planning aligned with the expansion of their mandates. Recent recruitment rounds are an important step, but they do not by themselves reverse a decade of cumulative capacity losses. Nor do they solve the broader problem of budget rigidity, which continues to squeeze the discretionary resources agencies need for inspections, enforcement, training, technology, and stakeholder engagement.

This study focuses primarily on administrative inputs and outputs—staffing levels, vacancies, and budget composition—rather than directly measuring regulatory outcomes. However, the link between these variables and sectoral performance is not purely abstract. In some sectors, agencies themselves have warned that budget constraints are affecting core regulatory activities. For example, Brazil’s electricity regulator (ANEEL) recently indicated that budget cuts could lead to sharp reductions in inspection activities and other operational services. Similar concerns arise in sectors such as civil aviation and water management, where effective oversight is closely tied to relevant regulatory outcomes, such as aviation safety and water quality. Future research could build on the patterns identified here by examining more systematically whether sustained reductions in regulatory capacity translate into measurable changes in these sectoral outcomes.

The broader lesson offered by our initial research effort - one that may well apply to the current U.S. debates over administrative downsizing - is that shrinking agencies without recalibrating their missions can weaken regulatory capacity. If governments reduce staff and compress budgets while leaving legal obligations intact, they risk creating regulators that remain formally in place but are progressively less able to carry out their functions effectively.