Union pays R$ 1.4 billion in overdue state debts

The federal government paid, in May, R$ 1.4 billion in overdue debts of states and municipalities, informed this Wednesday (7), in Brasília, the National Treasury Secretariat (STN). The numbers cover debts guaranteed by the Union and not honored by five states and are included in the Report on Guarantees Honored by the Union in credit operations.

There were R$ 721.93 million related to default in Rio de Janeiro, R$ 352.76 million in Pernambuco, R$ 216.25 million in Rio Grande do Sul, R$ 75.01 million in Goiás and R$ 38.44 in million from Minas Gerais.

In total, since 2016, the Union has disbursed BRL 56.98 billion to honor guarantees granted to credit operations in secured debts of subnational entities.

The guarantees represent the assets offered by the Union – represented by the National Treasury – to cover possible defaults on loans and financing by states, municipalities and other entities with national banks or foreign institutions, such as the Inter-American Development Bank (IDB), International Bank for Reconstruction and Development (IBRD), World Bank and CreditSuisse Bank, among others.

As guarantor of the operations, the Treasury is informed by creditors that a certain portion of the contract has not been settled.

Discount

If the entity does not fulfill its obligations within the stipulated period, the Treasury offsets the debts, but discounts the amount covered by blocking ordinary federal transfers, in addition to preventing new financing.

The National Treasury Secretariat reported that it monitors any delays in payment of contracts guaranteed by the Union, setting deadlines for settling outstanding debts and alerting debtors to the sanctions, penalties and consequences provided for in contracts and legislation.

If the federative entity does not settle pending issues, such as cases of honor of endorsement or delay in payments of guaranteed credit operations, it is prevented from obtaining a guarantee from the Union for new financing contracts for up to 12 months.

“Thus, if states or municipalities fail to pay installments of contracts guaranteed by the Union, it will be up to it to honor the amounts in default before the original creditors and execute the counter-guarantees offered by them through counter-guarantee contracts (which are signed between the Union and the borrowing entities In addition to the original amount due, the debtor is charged default interest, fines and other charges provided for in the loan agreements, also paid by the Union”, said the Treasury.

Judicial decisions

There are cases, however, of blocking the execution of counter-guarantees, due to court decisions. The secretariat clarifies, however, that the value of each honored guarantee is updated daily by the Selic Rate, the basic interest rate, from the date of the honor.

“Currently, obligations of the states of Alagoas, Espírito Santo, Maranhão, Pernambuco and Piauí, as well as the municipality of Taubaté (SP) are in this situation. The value of each honored guarantee is updated daily by the reference rate of the Special System of Liquidation and Custody (Selic) from the date of honor, as provided for in the counter guarantee contracts”, explained the Treasury.

The total balance to be recovered amounts to R$ 3.09 billion. Of this amount, Maranhão has a debt of R$ 1,032.17 billion, R$ 970.96 million from Pernambuco, R$ 728.18 million from Piauí, R$ 264.17 million from Alagoas, R$ 63.56 million from Espírito Santo and R$ 34.01 million refer to debts from Taubaté, in the state of São Paulo.