Union appeals decision that extended the deadline for Minas to join the Tax Recovery Regime | Minas Gerais

The federal government appealed the Supreme Court’s decision that extended the deadline for Minas to join the Fiscal Recovery Regime (RRF) for another 90 days. A petition presented by the Attorney General’s Office (AGU) this Tuesday (23) asks that the deadline be May 30th.

In the appeal, the agency argues that any postponement without significant compensation from the state Executive, such as the resumption of debt payments, could compromise fiscal responsibility and balance between states.

“On the one hand, it is unreasonable to grant differentiated treatment to one member state to the detriment of the others; on the other, the entire population of a federated entity cannot be punished with the interruption of public services in the event of fiscal collapse. In the current federative scenario and indebtedness of its entities, it is crucial to ensure compliance with the fiscal responsibility standards established by the legislator […]”, says an excerpt from the AGU petition.

AGU also states that MG has not amortized the debt for more than nine years, supported by court decisions that delay compliance with obligations and thus harm their tax situation.

“The result of this excess of postponements caused the State’s debt balance to increase from R$63.9 billion (January 2013) to R$142.9 billion (November 2023)”, explains another part of the document.

In addition to reducing the deadline, the institution requires a judicial determination for the resumption of debt service paymentsas if the state had already joined the RRF, suggesting that R$2.3 billion be paid throughout 2024.

“[…] the urgency of resuming debt payments in amounts capable of influencing the reduction of the debt balance is evident. Therefore, Minas Gerais should make a greater effort to pay its total accumulated debts from now on”, argues the AGU.

STF extends deadline for Minas Gerais to join the Tax Recovery Regime

Last Friday (19), the STF extended the deadline for Minas Gerais to join the RRF for another 90 days. The decision was made by minister Kassio Nunes Marques.

“The Fiscal Recovery Plan needs to be seriously considered, so that the State of Minas Gerais does not reach a financial situation that is difficult to reverse”, informed the document.

For the state government, the extension is essential for maintaining the fiscal balance of public accounts.

“By extending the deadline, the minister demonstrates his sensitivity to strengthening the federative pact so that the states, Congress and the federal government can jointly reach a solution to reduce interest rates and make the debt manageable, without affecting the state’s investment capacity,” he stated. by note from the governor of Minas Gerais, Romeu Zema (Novo).

On April 12, the state filed a lawsuit with the STF to request the suspension, for another 180 days, of payment of the state’s debt to the Unioncurrently in the order of R$165 billion.

“However, at this moment, the Government of Minas Gerais understands that, given new facts, especially the ongoing negotiation with the Ministry of Finance to review the format for negotiating the states’ debts with the Union, it is reasonable that the initial deadlines established by the STF are extended, preventing the State from being penalized”, stated the government, in a note.

“We reinforce that the initial proposals and the program presented by the Minister of Finance, Fernando Haddad, within the scope of the renegotiation of the states’ debts with the Union allow the actors involved to advance in the discussions, but they still require studies and evaluations to, only then, be taken to legislative consideration. This process certainly requires a longer period than that initially established by the Supreme Court”, added the Minas Gerais Executive.

The discussions aim to create an alternative to the Fiscal Recovery Regime, which provides for measures such as freezing civil servants’ salaries and a spending cap so that, after nine years, the state begins to pay the debt with the Union – over the period, the amount due would rise to more than R$210 billion.