In total, the Union honored R$12.3 billion in debts owed by states and municipalities that were guaranteed by the federal government and were not paid by the entities
National Treasury is the body of the Ministry of Finance | Credit: Reuters/Adriano Machado
Brasilia – In 2023, the Union honored a total of R$3.6 billion in unpaid debts in Minas Gerais. In total, R$12.3 billion in debts owed by states and municipalities that were guaranteed by the federal government and were not paid by the entities were honored, according to a report released this Wednesday (31) by the National Treasury.
This amount represents a jump of 25.6% compared to the R$9.8 billion honored in 2022.
The biggest costs to the Treasury with the settlement of guaranteed debts in 2023 relate to debts of:
- Rio de Janeiro (R$4.6 billion),
- Minas Gerais (R$3.6 billion)
- and Rio Grande do Sul (R$ 1.4 billion).
Although the operations give the federal government the right to execute counter-guarantees to recover the resources eventually used, the volume recovered by the National Treasury last year totaled only R$7.6 million.
The federal government acts as a guarantor of financing so that entities can obtain funding at lower interest rates. The procedure has a series of requirements, but some debtor states and municipalities are able to avoid payments through court decisions or by participating in a tax recovery program.
The States of Goiás, Rio de Janeiro, Rio Grande do Sul and, by virtue of a court decision, Minas Gerais.
Since 2016, the Union has made payments totaling R$64 billion with the aim of honoring guarantees in credit operations from States and municipalities. The total guarantees recovered by the federal government in this period was R$5.6 billion.
“The main factor that explains the low volume of recovered guarantees is that a large part of the honored guarantees are from entities that are in the Tax Recovery Regime and, therefore, have the benefit of temporary suspension of the execution of the counter-guarantee, which total approximately R $55 billion,” Treasury said.