The Minister of the Federal Supreme Court (STF) Dias Toffoli granted, last Friday (05/03), an injunction in favor of the State of Rio in the action filed by the Government of Rio de Janeiro, which requests the suspension of debt payment with the Union. Toffoli decided that Rio must pay, from now on, installments equal to those transferred in the same months last year and limited the total debt to be paid, per year, to the amount paid in 2023.
Considering the installments paid from January to May this year, the total amount was around R$3.4 billion. As the total amount for 2023 was R$4.9 billion, there is R$1.5 billion left to reach this value. With the reduction of installments to last year’s values, the limit established by the injunction will be reached in September.
“This decision is the beginning of our search for more security for the state’s coffers, to negotiate a new value for this historic debt, without harming Rio de Janeiro. It also means maintaining essential services for the population such as security, health and education. We want a payable installment. We consider that part of this debt has already been paid off, especially with regard to interest. Current billing methodologies are misleading“, stated Governor Claudio Castro.
With the decision, the fine imposed at the end of last year by the Fiscal Recovery Regime Supervision Council (RRF), which had increased the amount the state should pay in debt this year, is suspended by 30%. Before Toffoli’s injunction, Rio de Janeiro would have to disburse R$9.6 billion to the Federal Government in 2024, related to the payment of the debt, of which R$5.7 billion was just interest and charges.
Revenue frustration
In his sentence, Dias Toffoli highlights the revenue frustration caused by complementary laws 192 and 194/2022, which changed the ICMS charge for electricity, fuel and telecommunications, as one of the reasons for compromising the Fiscal Recovery Plan. The preliminary decision is important, as it helps to reduce the R$8.5 billion deficit foreseen in the 2024 Budget, but the state is still awaiting a definitive ruling on the case and is open to dialogue with the Union – defended by Toffoli in his decision – to search for a solution that will bring Rio to fiscal balance.
– The action, with all our claims, will still be judged by the STF. This is not a political fight, it is a federative institutional issue. We will continue dialoguing with the Federal Government in search of the best solution – highlighted Cláudio Castro.
Since joining the Fiscal Recovery Regime (RRF) in 2017, the State Government has been taking several measures to cut expenses, increase revenue, negotiate fairer conditions for paying the debt with the Union and reach financial balance. The actions show concern for responsible management of public accounts.
Historical debt
Rio de Janeiro’s debts were renegotiated in the 1990s, therefore, 30 years ago. 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. 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.
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.
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Tags: State Rio obtains reduction debt installments Union STF
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