{"id":92553,"date":"2025-01-17T11:03:40","date_gmt":"2025-01-17T14:03:40","guid":{"rendered":"https:\/\/murray.adv.br\/?p=92553"},"modified":"2025-01-17T11:03:42","modified_gmt":"2025-01-17T14:03:42","slug":"debt-relief-plan-sparks-tensions-between-government-and-states","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/debt-relief-plan-sparks-tensions-between-government-and-states\/","title":{"rendered":"Debt relief plan sparks tensions between government and states"},"content":{"rendered":"\n<h6 class=\"wp-block-heading has-text-align-center\"><strong><em>Governors of Rio, Minas Gerais, and Rio Grande do Sul threaten to reject the program<\/em><\/strong><\/h6>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>01\/17\/2025 <\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<p>A day after President Lula signed into law the State Debt Payment Program (PROPAG) with key vetoes, tensions between the federal government and state administrations escalated on Wednesday (15). While the National Treasury defended the program, opposition governors sharply criticized the changes.<\/p>\n\n\n\n<p>The harshest criticism came from governors Cl\u00e1udio Castro (Rio de Janeiro), Romeu Zema (Minas Gerais), and Eduardo Leite (Rio Grande do Sul). Leading opposition states and some of Brazil\u2019s largest debtors, these governors oversee administrations under the Fiscal Recovery Regime (RRF), established in 2017 to assist states in severe financial distress.<\/p>\n\n\n\n<p>According to the presidency, Mr. Lula vetoed provisions that could impact the federal government\u2019s primary fiscal balance. One of the vetoed measures would have allowed entities joining PROPAG to be exempt from meeting the targets and obligations of the Fiscal Recovery Regime. This veto was considered the most significant by the states.<\/p>\n\n\n\n<p>Introduced by Senate President Rodrigo Pacheco and approved by Congress, PROPAG aims to renegotiate state debts with the federal government. The program allows payments over 30 years with real interest rates between 0% and 2% annually. The terms depend on asset transfers from states to the federal government, contributions to the Federative Equalization Fund, and investment commitments from state governments.<\/p>\n\n\n\n<p>Governors now hope Congress will override the vetoes in the coming days. If lawmakers fail to restore the original provisions, governors have threatened not to participate in the debt renegotiation program.<\/p>\n\n\n\n<p><strong>States push back<\/strong><\/p>\n\n\n\n<p>Rio de Janeiro Governor Cl\u00e1udio Castro said his state is evaluating whether to join PROPAG. He noted that Rio is reviewing its assets, including properties and credits, and exploring alternatives such as creating a real estate fund to address its nearly R$200 billion debt. \u201cWe\u2019re conducting a thorough analysis to see how far Rio can go under this new reality without jeopardizing salaries, public accounts, or anything else,\u201d Mr. Castro said during a press conference at the Guanabara Palace.<\/p>\n\n\n\n<p>Mr. Castro described the vetoes as \u201cdisloyalty\u201d and \u201c100% political,\u201d arguing they disadvantage states governed by Mr. Lula\u2019s political opponents. \u201cThis isn\u2019t a political war\u2014it\u2019s a federative issue. But I\u2019m certain there\u2019s a strong political component in the federal government\u2019s stance,\u201d he said.<\/p>\n\n\n\n<p>Minas Gerais Governor Romeu Zema said his state, with debts of R$163 billion, will not join PROPAG if the vetoes remain. \u201cWe hope these vetoes are overturned. Otherwise, this plan won\u2019t work\u2014it\u2019ll be worse than what we already have. If it remains as mutilated as it is, we won\u2019t participate because it\u2019s worse than the RRF,\u201d Mr. Zema said. He also noted that he is coordinating with Governors Eduardo Leite, Cl\u00e1udio Castro, and Ronaldo Caiado (Goi\u00e1s) to lobby Congress to overturn the vetoes.<\/p>\n\n\n\n<p>The National Treasury dismissed the governors\u2019 criticisms, arguing that they do not reflect the approved legislation. National Treasury Secretary Rog\u00e9rio Ceron emphasized that states can remain in the RRF while joining PROPAG. Mr. Ceron estimated that the program would cost the federal government around R$20 billion if all states participate.<\/p>\n\n\n\n<p>Despite the short-term fiscal impact, Mr. Ceron said the program provides long-term solutions for state debt, enabling resources to be redirected to areas like education through savings on interest payments.<\/p>\n\n\n\n<p>He said that states remaining in the RRF while joining PROPAG would retain benefits such as federal guarantees for loans with private or multilateral institutions. However, they would continue to face strict spending limits tied to inflation. States leaving the RRF would lose federal guarantees but gain more flexibility with less restrictive spending rules.<\/p>\n\n\n\n<p>\u201cThis program resolves debt issues for all states willing to join PROPAG. There might be short-term pressures for states leaving the RRF, but they have the option to stay and many have accumulated reserves to manage their obligations,\u201d Mr. Ceron said.<\/p>\n\n\n\n<p>Rio Grande do Sul\u2019s Finance Secretary Pricilla Santana said the state will not join PROPAG due to Mr. Lula\u2019s vetoes, citing increased fiscal burdens, especially after 2024\u2019s devastating floods. \u201cRio Grande do Sul doesn\u2019t have the economic or financial capacity to join PROPAG\u2014it\u2019s not in our interest,\u201d Ms. Santana said.<\/p>\n\n\n\n<p>She added, \u201cMy pragmatism dictates that I must address the state\u2019s finances based on what is currently certain and concrete: Complementary Law 206 and the RRF. Politically, I know the governor will work hard to overturn the vetoes, and I hope for that outcome.\u201d<\/p>\n\n\n\n<p>*By\u00a0J\u00e9ssica Sant\u2019Ana,\u00a0Guilherme Pimenta,\u00a0Paula Martini,\u00a0Victoria Netto\u00a0e\u00a0Cibelle Bou\u00e7as \u00a0\u2014 Bras\u00edlia, Rio de Janeiro, and Belo Horizonte<\/p>\n\n\n\n<p>Source: Valor International<\/p>\n\n\n\n<figure class=\"wp-block-embed\"><div class=\"wp-block-embed__wrapper\">\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Governors of Rio, Minas Gerais, and Rio Grande do Sul threaten to reject the program 01\/17\/2025 A day after President Lula signed into law the State Debt Payment Program (PROPAG) with key vetoes, tensions between the federal government and state administrations escalated on Wednesday (15). While the National Treasury defended the program, opposition governors sharply [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[25786,25787],"class_list":["post-92553","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-debt-relief-plan","tag-tensions-between-government-and-states"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Debt relief plan sparks tensions between government and states - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/debt-relief-plan-sparks-tensions-between-government-and-states\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Debt relief plan sparks tensions between government and states - Murray Advogados\" \/>\n<meta property=\"og:description\" content=\"Governors of Rio, Minas Gerais, and Rio Grande do Sul threaten to reject the program 01\/17\/2025 A day after President Lula signed into law the State Debt Payment Program (PROPAG) with key vetoes, tensions between the federal government and state administrations escalated on Wednesday (15). While the National Treasury defended the program, opposition governors sharply [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/murray.adv.br\/en\/debt-relief-plan-sparks-tensions-between-government-and-states\/\" \/>\n<meta property=\"og:site_name\" content=\"Murray Advogados\" \/>\n<meta property=\"article:published_time\" content=\"2025-01-17T14:03:40+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-01-17T14:03:42+00:00\" \/>\n<meta name=\"author\" content=\"Gelcy Bueno\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Gelcy Bueno\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/murray.adv.br\/en\/debt-relief-plan-sparks-tensions-between-government-and-states\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/murray.adv.br\/en\/debt-relief-plan-sparks-tensions-between-government-and-states\/\"},\"author\":{\"name\":\"Gelcy Bueno\",\"@id\":\"https:\/\/murray.adv.br\/en\/#\/schema\/person\/dd0d0bea46c2436124555d18c1a0d52e\"},\"headline\":\"Debt relief plan sparks tensions between government and states\",\"datePublished\":\"2025-01-17T14:03:40+00:00\",\"dateModified\":\"2025-01-17T14:03:42+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/murray.adv.br\/en\/debt-relief-plan-sparks-tensions-between-government-and-states\/\"},\"wordCount\":786,\"keywords\":[\"Debt relief plan\",\"tensions between government and states\"],\"articleSection\":[\"Murray News\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/murray.adv.br\/en\/debt-relief-plan-sparks-tensions-between-government-and-states\/\",\"url\":\"https:\/\/murray.adv.br\/en\/debt-relief-plan-sparks-tensions-between-government-and-states\/\",\"name\":\"Debt relief plan sparks tensions between government and states - 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