Government increases limit for loans from states and municipalities with Union guarantee

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Approved resolution increases by up to BRL 6 billion annual limit for contracting credit operations in 2023, with BRL 3 billion for loans guaranteed by the Union and BRL 3 billion without guarantee. The government, through the National Monetary Council (CMN), decided this Thursday (18) to increase the limit of states and municipalities to contract loans with and without Union guarantee. According to the resolution approved this Thursday: credit operations with a Union guarantee go from up to R$ 3 billion to up to R$ 6 billion in 2023, 2024 and 2025 credit operations without a Union guarantee go from up to R$ 7 billion to up to R$ $ 10 billion in 2023 and for up to R$ 9 billion in 2024 and 2025 Loans made with a guarantee from the Union have lower interest rates, since, in case of default by states and municipalities, the National Treasury covers the default. The new limits come into effect on June 1, according to the Ministry of Finance. “The expansion of the annual global limits on the amounts in question is in line with the primary result projections for subnational entities contained in the 2023 Budgetary Guidelines Law (LDO),” says the folder in a note. The CMN is a collegiate body chaired by the Minister of Finance, Fernando Haddad, and composed of the President of the Central Bank of Brazil, Roberto Campos Neto, and the Minister of Planning and Budget, Simone Tebet. It is within the functions of the CMN to define the annual limits for contracting credit operations with the public sector, specifying the maximum amounts that may be contracted in credit operations with and without a Union guarantee.

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