After an agreement between the government and parties, the National Congress overturned, this Thursday (27), part of the vetoes to the project that created the Program for the Full Payment of State Debts (Propag). 
The program – sanctioned in January this year – creates more favorable conditions for the federation units to pay the debts they accumulate with the Union.
Under the agreement, the vetoes on six provisions of Complementary Law 212 of 2025, which created Propag, were overturned. On the other hand, the remaining 24 vetoes to the text that arrived from parliament were maintained.
The government hopes that, with the agreement, more states will join the program to pay off debts. The federation units have until December 31st to join Propag.
“This project will obviously benefit all Brazilian states, but in particular Rio de Janeiro, Minas Gerais, Goiás, São Paulo and Rio Grande do Sul”, explained, during the session, the government leader in Congress, senator Randolfe Rodrigues (PT-AP).
Debt payment
One of the vetoes overturned allows states to pay their debts through the National Regional Development Fund (FNDR). This fund was created by the tax reform to reduce regional inequalities, encourage productive activities and promote science and technology.
Initially, the government claimed that the use of this fund to pay debts was unconstitutionalsince this is not one of the FNDR’s original responsibilities.
Another veto overturned by Congress maintained benefits provided for in debt renegotiation in 2021, such as the one that provides for the Union to assume the payment of credit operations with the financial system and multilateral institutions that have the Union itself as guarantor.
Value reduction
Another overturned veto maintained the possibility for the Union to reduce the amount paid by the federation units from the states’ debts between 2021 and 2023 to carry out works under the Union’s responsibility.
The leader of the PP in the Chamber and rapporteur of the Propag project, deputy Doutor Luizinho (PP-RJ), thanked the government and the parties for the agreement built around the topic. “It is a historic day that will free the states from a sword that has restricted public investment, which has restricted progress in health and education in recent years”, he explained.
Understand
The law that created Propag allows entities to pay their debts to the Union in up to 30 years and with interest ranging from 0% to 2% per year, plus the inflation recorded each year. The previous program’s rate reached 4% – plus inflation.
States can also pay off up to 20% of the outstanding balance of their debts through the transfer of public companies or assets from the state to the Union or through contributions to the Federal Equalization Fund, through which states in a bad fiscal situation will compensate states with a good fiscal situation.
According to calculations by the National Treasury, state debts total more than R$820 billion, with more than 90% of the total referring to five units of the federation – São Paulo (R$ 291.7 billion), Rio de Janeiro (R$ 178.5 billion), Minas Gerais (R$ 164.1 billion), Rio Grande do Sul (R$ 101.6 billion) and Goiás (R$ 19.0 billion).
