RS: suspension of debt with the Union will be essential for the state to rebuild itself
Approved this Tuesday (14) in the Chamber of Deputies, the complementary bill 85/2024 suspends the payment of the state’s debt to the Union for three years. During this period, the government of Rio Grande do Sul will also have zero interest on the debt stock.
According to the Ministry of Finance, the suspension of debt payments for 36 months will result in savings of R$11 billion for Rio Grande do Sul’s coffers. The temporary exemption from interest will have an impact of R$12 billion.
The Rio Grande do Sul government must deposit the R$23 billion in a specific account, the exclusive use of which will be to finance reconstruction works in the state.
Professor of Economic Sciences at Universidade Presbiteriana Mackenzie Claudia Vasconcelos believes that without the momentary debt forgiveness, the state would hardly have the cash to remain in compliance — and, at the same time, rebuild what was destroyed by the floods.
“Firstly, the issue of revenue in the state has been completely compromised and we don’t even know how long this will last. Secondly, several extraordinary expenditures are necessary. It is an extremely necessary incentive. We have an emergency issue — and Without this time off, any action by the government of Rio Grande do Sul is practically impossible.”, he assesses.
According to economist Deborah Bizarria, in situations of public calamity, such as the one faced by the people of Rio Grande do Sul, extraordinary support measures are justified. “It is in this context of exceptionality that the federal government’s measure is important to allow the state to use resources in emergency reconstruction actions, without the immediate pressure of financial obligations that were already owed”, she assesses.
Alongside Rio de Janeiro and Goiás, Rio Grande do Sul is one of the three states that have joined the Fiscal Recovery Regime (RRF) — a program that allows federated entities to renegotiate their debts with the Union, as long as they adopt adjustment measures of public accounts.
The state’s total debt with the Union reaches R$97.7 billion, according to the Ministry of Finance. The Rio Grande do Sul RRF began in July 2022. Initially, it would end in December 2030, a period that could be extended due to the three-year temporary suspension that the federal government granted.
Bizarria highlights that the reasons that justify the suspension of payment of Rio Grande do Sul’s debt to the Union cannot serve as a pretext for other states that are not experiencing the same problems to try to obtain forgiveness from the government.
“It is worth noting that the exceptionality of Rio Grande do Sul should not be portrayed as a precedent for debt forgiveness in other states, because then, yes, we would have a feed on the fiscal irresponsibility of state governments. Although this measure is important, it cannot end up creating the opportunity for other states to say they can’t pay their bills”, he warns.
When presenting the reconstruction plan for Rio Grande do Sul last week, the state governor, Eduardo Leite (PSDB), announced that R$18.8 billion will be needed.
More than 101 thousand homes were affected in Rio Grande do Sul; points out CNM
By Brasil 61
