Brazil's Supreme Court adapts decisions on state debts to agreement with the federal government.
Brazilian Supreme Court justices have decided, by majority vote, to adapt the injunctions granted to states regarding the calculation of their debt to the federal government to the agreement signed between the government and the states; according to the agreement, the states and the Federal District will have a six-month grace period on installments until December; starting in January, the installments will have discounts, which will be progressively reduced until July 2018.
Michelle Cannes, from Agência Brasil - The ministers of the Supreme Federal Court (STF) decided, by majority vote, to adapt the injunctions granted to the states regarding the calculation of their debt to the Union to the agreement signed between the government and the states.
The injunctions granted to the states allowed for the payment of debts in smaller installments, as they authorized the adjustment of debts using simple interest (which applies only to the initial capital) and not compound interest (interest on interest), the method currently adopted by the Federal Government.
On the 20th, Finance Minister Henrique Meirelles and representatives from 25 states reached an agreement to refinance the debt. According to the agreement, the states and the Federal District will have a six-month grace period on payments until December. Starting in January, payments will have discounts, which will be progressively reduced until July 2018.
In today's hearing (1st), the ministers analyzed a lawsuit from Santa Catarina, the first state to obtain an injunction. Other states also appealed to the Court, such as Rio Grande do Sul, Minas Gerais and Mato Grosso do Sul.
Most ministers followed the vote of the rapporteur of the action, Minister Edson Fachin, who said yesterday (30) that he had received information from the Union about the agreement signed with the states. The Union asked that the injunctions be reviewed so that the terms of the debated agreement could be applied.
"I propose to the panel that the request made by the Union be granted [accepted] in these terms so that the exact terms of the agreements negotiated with the states be applied to the case files and the preliminary injunctions, starting on July 1, 2016, as per the minutes of the meeting held on June 20th," said Fachin.
Judgment
In April, the Supreme Court put the issue on the agenda, but decided to suspend for 60 days the judgment of the lawsuits regarding the calculation of states' debts to the Union. The Court's decision followed a proposal by Justice Luís Roberto Barroso. According to the Justice, the matter should not be taken to court and, during the suspension period, should be decided by the parties and the National Congress.