RS will be able to reduce interest on its debt with the Union in exchange for investments in education

Photo: Disclosure/GovRS

O Rio Grande do Sul will be able to reduce the interest on its debt with the Union by increasing the number of students in technical high school. The initiative, called “Interest for Education”, offers the State the opportunity to choose between different interest rates, each associated with specific counterparts.

To obtain an interest rate of 3% per year in debt renegotiation, RS needs to invest at least half of the amount saved by reducing the rate in expanding enrollment in technical secondary education. For a rate of 2.5%, the required investment increases to at least 75% of the amount saved. And to achieve a rate of 2% per year, the State must apply 100%. Currently, RS’s debt to the Union is R$92.9 billion.

The proposal to renegotiate the states’ debt with the Union was discussed in a meeting between the Minister of Finance, Fernando Haddad, and the governors of the South and Southeast Integration Consortium (Cosud), which includes RS. This proposal aims to offer temporarily reduced interest rates, from 2025 to 2030, in exchange for investments in education. States that reach enrollment expansion targets within six years will have a permanent reduction in debt interest rates.

Furthermore, another proposal was presented so that interested states could reduce the interest rate by 0.5% through an extraordinary amortization of 10% of the outstanding balance. This reduction can reach 1% with an extraordinary amortization of 20% of the outstanding balance. Amortizations can be made on assets, such as shares in public companies. According to data from the Ministry of Finance, these extraordinary amortizations can result in a real interest rate of 1% per year.

The terms of these programs must be approved by the Chamber of Deputies and the Senate, in the form of bills. These proposals come after statements by President Lula about the need to negotiate the terms of state debt contracts, highlighting that renegotiation is not a favor, but an obligation of the federal government.

The governor of RS, Eduardo Leite, has insisted on the need to change the terms of the contract signed by the State, mainly in relation to the Tax Recovery Regime (RRF).