The Senate approved this Wednesday (14) the bill that creates the Full Payment of State Debts Program (Propag) so that states and the Federal District can renegotiate debts with the Union and pay the debts in up to 30 years with reduced interest. The text will be forwarded for analysis by the Chamber of Deputies. 
Currently, state debts total more than R$765 billion, with around 90% referring to debts from four states: Goiás, Minas Gerais, Rio de Janeiro and Rio Grande do Sul.
PLP 121/2024, authored by Senate President Rodrigo Pacheco (PSD-MG), also provides for the possibility of states transferring assets to the Union as part of the payment and establishes investment in education, sanitation, housing, adaptation to climate change, transportation and public safety as a counterpart. States that have debts with the National Treasury will be able to join Propag within 120 days after the law is published.
According to the proposal, states that decide to hand over assets to the Union will be able to receive a reduction in the debt indexation rate, which is currently equivalent to the Broad Consumer Price Index (IPCA) plus 4%. The discounts will be made according to the amount of debt that will be paid off upon joining the program and other specific fiscal and financial rules. With this, states will be able to achieve interest rates of IPCA plus 0%, 1% or 2%.
The text provides for the creation of the Federal Equalization Fund, which will receive part of the resources saved with the interest discount from the renegotiation for investments in the states. Another part of the money may be applied to investments in the state itself, instead of being paid as interest on the debt to the Union. At least 60% must be invested in professional and technical education.
According to the rapporteur of the matter, Senator Davi Alcolumbre (União-AP), the Brazilian population will benefit from the changes. “These resources did not exist anywhere; they were used to pay interest on the debt. And now they will actually exist in the lives of Brazilians in all states of the Federation. What would be interest on the debt will be transformed into direct investment in the states,” he said, noting that the proposal was developed in consensus between the federal and state governments.
Pacheco thanked his fellow senators for understanding the distress of the indebted states and asked for a speedy vote in the Chamber. “The states can now see the horizon of being able to resume their investment capacity and that the issue of these states’ debt can be resolved once and for all.”
Municipalities
Senators also approved today in two rounds the proposed Amendment to the Constitution (PEC 66/2023) that reopens the deadline for municipalities to pay off their debts with Social Security in installments and sets limits for the payment of court orders. The proposal will now be analyzed by the Chamber of Deputies.
*With information from the Senate Agency
