Lawsuits and RRF make it difficult to recover amounts paid by states and municipalities
The National Treasury has not been able to recover a penny this year in the execution of counter-guarantees of states and municipalities that have not paid installments of loans guaranteed by the federal government. The data are included in the monthly report on guarantees honored and show the gradual decline in the recovery of collateral by the federal government.
In 2016, when official records began, the federal government recovered R$2 billion. Since then, the amount has been decreasing until it reached the milestone of zero reais recovered from January to June this year. The worst year in the series so far was 2021, when only R$1.56 million was recovered for the entire year.
The National Treasury attributes the low recovery to two factors: the existence of judicial decisions that prevent the adoption of such a measure, and the permanence of a state in the Fiscal Recovery Regime (RRF).
“Before 2016, the level of default was low, so there was little or almost nothing to recover, but from the moment this situation changed, judicial decisions preventing recovery also increased. In addition, the creation of the RRF in 2017 and its extension in 2021 also contributed to the reduction of the amounts immediately recovered,” the Secretariat of the Treasury told Valor.
The RRF law provides for the temporary suspension of the execution of counter-guarantees of the states that are in the regime. This is the case of Rio de Janeiro, Goiás, and Rio Grande do Sul. Minas Gerais has not yet had its recovery plan approved but has already obtained a court ruling that prevents the federal government from enforcing the collateral.
Other defaulting states and municipalities have managed to prevent the federal government from enforcing the counter-guarantees by going to court, citing various reasons. Alagoas, Espírito Santo, Maranhão, Pernambuco, and Piauí are in this situation, as is the municipality of Taubaté (in São Paulo), according to the Finance Ministry.
Together, these six subnational entities owe R$3.3 billion to the federal government. That is, this is the balance to be recovered through the execution of counter-guarantees, but which has not yet been done due to court decisions. The value takes into account only the amount that has not yet been received by the courts and does not include the RRF amounts.
There are also cases in which the federal government manages to execute the counter-guarantee, but has to return the money to the entity by court order. This has already happened in a Minas Gerais contract with CreditSuisse and in a Taubaté loan with the Andean Development Corporation.
Between 2016 and June this year, the federal government spent R$58.61 billion to honor guarantees in credit operations defaulted by states and municipalities, recovering only R$5.61 billion (9.57%). In addition to the original amount, the debtor is charged interest, fines, and other fees, also paid by the federal government, when the entity defaults.
Felipe Salto — Foto: Wenderson Araujo/Valor
Felipe Salto, the chief economist and partner at Warren Renascença, believes that the mechanism for granting loans guaranteed by the Union is problematic. “We end up with a situation in which the Union concentrates the burden and cannot mitigate it promptly through the legal instruments provided.”
The Treasury was not immediately available for comment.
*Por Jéssica Sant’Ana — Brasília
Source: Valor International