Governor Cláudio Castro (in the featured image) filed a lawsuit with the Federal Supreme Court (STF) this Friday (26) to temporarily suspend the payment of Rio de Janeiro’s debt to the Union, which totals R$ 191 billion. The measure will allow Rio de Janeiro to have the security to negotiate the recalculation of the amount, without posing risks to the state coffers.
The State of Rio understands that, over the last few decades, conditions considered abusive by the Union were imposed. In view of this, the action requests the exclusion of undue and illegal amounts included in the debt balance over time, in accordance with parameters compatible with the other public expenses.
When the first renegotiations began, in the 1990s, the state debt with the Union was R$13 billion. Since then, R$155 billion has been paid – around R$108 billion just in interest and charges. Despite the amount already paid, Rio still owes R$160 billion to the Union and R$30 billion for loans guaranteed by it. There is still R$1 billion in operations not guaranteed by the Federal Government.
In addition to the debt, the State was also harmed by impacts on the coffers, due to policies implemented by the Federal Government, such as the reduction of ICMS on energy, telecommunications and fuels. By giving up part of this revenue, Rio de Janeiro loses, on average, R$9 billion per year.
“For the first time, the State of Rio de Janeiro puts the correct discussion on the table, the reason why the debt reached this level. The truth is that there is a multibillion-dollar, unpayable debt that is growing much more than the possibility of growth for our state and even the country. I have been active in this discussion, reinforcing the need to build a path so that we can have financial balance to invest and guarantee the provision of public services to the population”, declared Cláudio Castro.
Historical debt
Rio de Janeiro’s debts were renegotiated in the 1990s, therefore, 30 years ago. Since then, they have gone through several negotiations and refinancing. In 1999, there was the largest refinancing contracted, of R$13 billion – at the values at the time. Over time, debts were impacted by various federal laws and regulations, in addition to numerous liabilities.
The amount of Rio de Janeiro’s debt showed high growth, among other reasons, due to the indexes used to charge interest (IGP-DI + 6% and later IPCA + 4% or Selic) over time. Added to this is the methodology of cumulative variation in indices established by the Union, instead of adopting a monthly model.
