Brazil’s Federal Government Has No Timeline to Help States

Finance Minister Henrique Meirelles says it is important 'not to implicitly transfer the state debt problem to the Union'.

Finance Minister of Brazil, Henrique Meirelles, told reporters on Friday, December 30th that the federal government has no estimate of when it will be able to render federal aid to states in critical fiscal situations, such as Rio de Janeiro and Minas Gerais, which have declared financial calamity.

“We do not yet have a specific date for this; they are facing a serious problem, but the Union is too, so we must prioritize,” said Meirelles.

The statement came a day after Brazil’s President Michel Temer vetoed a special fiscal recovery bill for the states that had been approved in Congress. According to Temer the changes made on the original bill by the Chamber of Deputies made the measure ‘more or less useless’.

In the original proposal sent by the government, the states in financial trouble that joined the fiscal recovery regime would have a moratorium of 36 months in their debt repayment.

In return, the federal government wanted states to increase social security contributions, suspend salary increases and public tenders, privatize companies, and reduce tax incentives. All these counterparts were overturned by Chamber representatives.

According to Temer the financial aid was not intended to be only immediate emergency help to get states out of this particular difficult situation. “When you just hand over the money to a state (without state’s counterpart actions) that serves an emergency, but it does not serve to prepare for the future,” said the President justifying the veto.

Now the federal government will try to negotiate individually with each state. For Meirelles states must also seek to find solutions to their problems and not rely solely on help from the Union.

“We are, like everyone else, very concerned about the emergency situation of the states, but it is important not to implicitly transfer the state debt problem to the Union. The Union has not created the states’ problems. The Union is facing and trying to resolve its own problems,” he concluded.

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