Government agreement unlocks billion-dollar housing debt – 01/07/2024 – Panel SA

Private and public banks, credit unions, pension and investment funds, and even state governments await payment planning by the National Treasury of an outstanding debt of R$157 billion.

Last year, only R$16 billion was paid. At the end of last year, a conciliation agreement approved by the TCU (Federal Audit Court) between the Ministry of Finance, CGU (Comptroller General of the Union), Central Bank and Caixa Econômica Federal unlocked the settlement of accounts.

According to the balance sheet updated by the Treasury at the beginning of this year, the total debt is R$262 billion and will have to be paid by 2026.

This liability refers to real estate financing made by the Housing Finance System when the BNH (National Housing Bank) still existed, which was extinguished in 1986.

Due to the high inflation of that period, the contracts had a type of residual balance that could be deducted by exchanging this debt for another, a procedure called novation. Today this is still possible to do.

The entities that carried out these debt exchange operations became creditors of the so-called Salary Variation Compensation Fund, currently managed by Caixa.

Every year, the Treasury settles accounts with this fund to pay creditors, depending on budget provisions.

Locks

However, differences of interpretation regarding certain points of the law relating to certificates of fiscal regularity and even the number of contracts per borrower made these operations so difficult that the TCU (Federal Audit Court) opened a case in 2019.

Recently, under the coordination of the AGU (Attorney General of the Union), there was an agreement that, at the end of last year, was submitted to the court of accounts and approved.

For the TCU minister, Augusto Nardes, there was a “cleaning of everything” to “make credit viable for people to have financing again with favorable conditions”.

The FGTS is the largest creditor, according to Nardes, who reported the case at the court of accounts.

In the market, there is uncertainty about the Treasury’s ability to pay this bill. The budget forecast for 2024 does not foresee the repayment of these credits and there is an effort by the economic team to avoid extraordinary expenses in order to meet the zero deficit target.

Balance

According to Caixa, the agreement covers contracts audited by the institution until August 2017 and corresponds to around 60% of the fund’s liabilities — around R$157 billion.

In 2023, around R$13.5 billion were reimbursed to creditors, through debt novation.

The bank also informs that, after reconciliation, the Treasury authorized R$16 billion in novations and the full use of the 2023 Budget for payment.

With Diego Felix

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