Union paid R$ 1.34 billion in state debts in February

The Union additionally coated the money owed of the next states: R$ 61.3 million from Rio Grande do Sul, R$ 44.71 from Maranhão, R$ 44.26 from Piauí, R$ 41.38 from Pernambuco and R$ 31.54 of the Holy Spirit.

The information are within the Report on Ensures Honored by the Union in Credit score Operations, launched this Tuesday (7) by the Nationwide Treasury Secretariat. The ensures are enforced by the federal authorities when a state or municipality defaults on a credit score operation. On this case, the Treasury covers the default, however withholds transfers from the Union to the debtor till the distinction is paid, charging fines and curiosity.

Within the first two months of the yr, the Union settled R$ 2.249 billion in arrears from subnational entities. Of this complete, R$1.036 billion went to Minas Gerais, R$372.04 million to Maranhão, R$300.43 to Rio de Janeiro, R$164.38 million to Piauí and R$155.03 million to Goiás.

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The variety of states with arrears coated by the Treasury elevated from seven in January to eight in February, with the inclusion of Espírito Santo, which was not a part of the checklist. In 2022, along with the states above, that they had ensures honored by União Alagoas and Rio Grande do Norte.

Relating to the municipalities, the Treasury didn’t cowl late money owed from municipalities this yr. Final yr, the Union honored R$ 32.06 million in ensures from the Municipality of Taubaté (SP).

The ensures honored by the Treasury are deducted from Union transfers to federated entities – comparable to revenues from participation funds and Tax on Circulation of Items and Providers (ICMS), amongst others. Overdue obligations incur curiosity, late fee and different working prices associated to the interval between the maturity of the debt and the efficient honoring of the quantities by the Union.

Tax Restoration Scheme

In recent times, choices by the Federal Supreme Courtroom (STF) have prevented the execution of counter-guarantees by a number of states in monetary problem. Subsequently, the courtroom mediated negotiations for the inclusion or continuity of state governments within the fiscal restoration regime (RRF), which offers for the installment and staggering of money owed with the Union in alternate for a spending adjustment plan. In recent times, Goiás, Rio de Janeiro and Rio Grande do Sul have signed agreements with the federal authorities.

Originally of the covid-19 pandemic, the courtroom granted an injunction to droop the execution of ensures in a number of states. Some counter-guarantees from Minas Gerais had been additionally not enforced due to injunctions granted by the STF.

With the adhesion of the state of Rio de Janeiro to the RRF on the finish of 2017, the state was in a position to contract new credit score operations with a assure from the Union, though it was in default. On the finish of 2020, Minister Luiz Fux, of the STF granted an injunction holding Rio de Janeiro within the tax recovery scheme. In June of final yr, the state, in settlement mediated by the Supreme Courtconcluded negotiations with the Union to proceed within the RRF.

Additionally in June 2022, the Rio Grande do Sul closed an settlement with the Union and had the tax restoration plan authorized. The plan permits the state to repay, in a staggered method, the Union’s debt, whose fee had been suspended by an injunction from the Federal Supreme Courtroom since July 2017. In alternate, the federal government of Rio Grande do Sul should implement a fiscal adjustment program that gives for privatizations and reforms to cut back native spending.

In Could 2020, the STF approved the Goiás authorities to affix the fiscal restoration bundle in alternate for the adoption of a state spending ceiling. In December 2021, Goiás signed the adhesion to the RRF, which permits the suspension of debt funds to the Union in alternate for a spending adjustment plan.

The one indebted state that has not joined the RRF is Minas Gerais. In July final yr, Minister Nunes Marques, of the STF, granted an injunction that permits the state to barter an adjustment plan with the Union with out the approval of the Legislative Meeting. In the identical month, the Nationwide Treasury revealed an ordinance authorizing the federal government of Minas Gerais to attract up a proposal to formalize entry into this system.