Public Accounts

Union pays debts of MG, GO, RN and the state of Rio last month; total honored in 2019 already exceeds value of 2018

In August, the Federal Government paid R $ 633.71 million in secured debts of subnational entities, of which R $ 190.79 million related to defaults in the state of Rio de Janeiro, R $ 198.69 million in Minas Gerais, R $ 233, 94 million from Goiás and R $ 10.29 million from Rio Grande do Norte. The data are in the  Report on Guaranteed Credit Guarantees by the Union , released today (16/9) by the National Treasury Secretariat.

In the accumulated from January to August this year, the Treasury honored R $ 5.25 billion in secured debts of the entities. The amount already exceeds the $ 4.82 billion honored throughout the past year, which means that the total honored in 2019 will be the largest in the historical series, started in 2016.

According to Ordinance MF No. 501 of November 23, 2017, some borrowers are temporarily unable to contract new Union-backed credit operations, as shown in Tables 2 and 3 of the Report.

Understand the warranty honors process

As guarantor of credit operations, the Federal Government, represented by the National Treasury, is informed by the creditors that the state or municipality has not settled a certain portion of the contract.

 In view of this notification, the National Treasury informs the borrower of the debt to comment on late payments. If the entity does not fulfill its obligations within the stipulated period, the Union pays the default values.

 After this discharge, except in cases where there is a block in the execution of counter-guarantees, the Union begins the credit recovery process as provided for in the contract, that is, the execution of counter-guarantees indicated by the states and municipalities when the contracts are signed. Overdue obligations bear interest, arrears and other operating costs for the period between the maturity of the debt and the effective honor of the amounts by the Union.