Government of RS is authorized to contract US$500 million from the IDB to pay court orders

The government of Rio Grande do Sul was authorized by the Legislative embly to contract up to US$500 million in credit from the Inter-American Development Bank (IDB) – an amount whose majority of the application must be destined to the payment of court orders. The project was approved by 44 votes in favor and one against – deputy Gustavo Victorino (REP) – and the loan will be guaranteed by the Union.
The hiring had already been approved in July 2022. However, the bank did not accept the way in which terms would be set out in the contract and demanded the guarantee of exclusive use of the resource to pay court orders – therefore, a new project returned to the Legislative embly.
In March 2022, Leite went to Washington DC and met with IDB representatives. “We took the opportunity to discuss other partnership possibilities. The IDB was responsible for financing, through Profisco, measures that resulted in the modernization of the State Revenue, for example, in applications such as Menor Price and Nota Fiscal Gaúcha”, stated the governor at the time.

Four months later, Parliament approved the contracting of the credit operation. There were 51 deputies in favor and none against.

Since the hiring took place right at the beginning of the implementation of the Tax Recovery Regime (RRF), the parties had to re-discuss the terms of the contract. In this second half of 2023, Palácio Piratini sent a new text for consideration by the Legislature.

“At the time of approval of the Law, the implementation of the Fiscal Recovery Plan had just begun and the credit operation provided for there was not yet fully structured”, states the justification for the Executive’s project.

“It is worth noting that, despite the proposed editorial adjustment, 99.64% of the resources from the contracted credit operation remain destined for the payment of court orders by direct agreement with creditors, in accordance with the provisions of Law No. 14,751, of October 15, 2015, which establishes the Precatório Conciliation Chamber. Therefore, the commitment to leveraging the write-offs of the stock of precatório is reiterated and that the discharge plan prepared indicates that, for the first time, the State of Rio Grande do Sul has a sustainable strategy to honor these liabilities until 2029, without that it is necessary to disproportionately increase the contribution from the State Treasury, which would harm the provision of public services to the society of Rio Grande do Sul”, says the Executive project.

Precatório is an administrative procedure through which public debt is paid resulting from a court ruling, from a process that has reached its end.

At the moment, the stock of court orders in Rio Grande do Sul is around R$17 billion – debt that the State needs to pay off by 2029.

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