Brazil's Supreme Court requests statement from Rio Grande do Sul regarding its debt to the Federal Government.

Rio Grande do Sul 247 - Brazilian Supreme Court Justice Marco Aurélio has given the government of Rio Grande do Sul 15 days to respond to a request from the federal government to reconsider its August decision that prevented the blocking of funds transferred to the state due to non-payment of its debt to the Union. The issue involves the negotiation process in which the state seeks a fiscal recovery agreement, similar to the one reached with the federal government. Rio de Janeiro.

In his ruling, Marco Aurélio clarified that the injunction preventing the application of sanctions to the state for default was intended to facilitate negotiations between the parties, but he decided to re-examine the case in light of information provided by the Attorney General's Office (AGU) that the decision had harmed the negotiations.

"Given the inherently precarious and ephemeral nature of precautionary pronouncements, and considering the intended objective, which is to facilitate self-composition between the parties, encouraging them to seek solutions, especially from the state of Rio Grande do Sul, which, by all indications, has not been occurring, it is necessary to hear from him before examining what was requested by the defendant," the minister decided.

Last week, after meeting with Marco Aurélio, Finance Minister Henrique Meirelles said that the federal government's negotiations to reach a fiscal recovery agreement with Rio Grande do Sul are in a preliminary phase. According to the minister, the necessary conditions for joining are still being discussed.

According to Meirelles, it has not yet been discussed whether the local government should carry out further privatizations as collateral in the agreement, and whether the sale of shares in Banrisul, the state-owned bank, will be sufficient to complete the recovery.

Earlier this month, the government of Rio Grande do Sul announced the sale of 49% of the ordinary shares (with voting rights) of Banrisul. This measure is part of the state's fiscal adjustment package signed with the federal government, which includes, in addition to privatizations, spending cuts, increases in the rates of the Tax on the Circulation of Goods (ICMS), a freeze on salary adjustments for civil servants, and a ban on hiring new personnel.