The debt of the States

A long-standing demand of the states, the renegotiation of the debt of federated entities with the Union on more favorable terms is close to being realized. The Senate will vote, in the first week of November, on Complementary Law Project number 238. Approved in the Chamber of Deputies, the text establishes new readjustment criteria and interest rates more palatable to the depleted state treasuries. The immediate relief for Rio Grande do Sul, in 2013, will be in the order of R$ 1 billion, according to official estimates. In total for all federated entities, it reaches the figure of R$ 15 billion.

The project is an initiative of the federal government, finally sensitive to the hardships faced by indebted governors lacking resources for investments, public works, and social programs. The constant pressure from representatives in Congress worked, proving the need for unity and determination in defending the interests of Rio Grande do Sul.

The current state debt crisis has been building since 1998, when the federal government promoted a general renegotiation on more reasonable terms than those then in place. Over time, economic stabilization and reduced interest rates, in contrast to the maintenance of high debt servicing, have created distortions. Rio Grande do Sul is a clear example of this situation. The initial debt was R$ 9,5 billion; the state paid R$ 17 billion up to last year, almost double, and continues to owe the staggering sum of R$ 42 billion.

The states will have more resources to invest without failing to honor their commitments and keep public employees paid on time. Governors gain more breathing room to act. In the case of Rio Grande do Sul, we still have much to claim from the Federal Government and, therefore, we have submitted a proposal in the Senate to create a Special Commission for Account Reconciliation (Bill 427/2013). The purpose is to evaluate the state's financial participation in the implementation of the III Piratini Petrochemical and Fine Steel Complex, as well as the advance payments for works under the responsibility of the Federal Government, including investments in federal highways and the purchase of land for agrarian reform. It is also necessary to mention the credits related to the Kandir Law, a provision that the federal government does not fully comply with.

Issues of this nature, concerning the federation and the relations between federated entities, such as the unification of the ICMS (Tax on Circulation of Goods and Services), the State Participation Fund, and municipal debt, have been addressed in isolation. The Union is missing the opportunity to debate with the nation a profound tax reform and a new Federal Pact. A model founded on cooperation between the federative units of the Republic, with the provision of greater autonomy for states and municipalities. This is a struggle that will still demand much from all of us.