Rio Grande do Sul closes the second quarter in the black, but drops compared to 2023

Rio Grande do Sul’s public accounts closed in the black in the second four months of 2024. According to the Fiscal Transparency Report (RTF), released by the Finance Secretariat (Sefaz) this Monday (30), the budget result, which reflects the difference between revenues and expenses, totaled R$5 billion from January to August. Node same period in 2023, the value was higher, reaching R$6.6 billiondriven by the privatization of Corsan (Companhia Riograndense de Saneamento).

Current revenues, which exclude intra-budgetary revenues, totaled R$40.9 billion, while current expenses totaled R$35.6 billion. The information was released at a press conference attended by Sefaz secretary, Pricilla Santana.

Despite the crisis that the State is facing due to the May floods, the ICMS revenue recovered from July, totaling R$1.5 billion more in the first eight months compared to the same period in the previous year. According to the Treasury, part of this growth is related to new forms of taxation on fuels and electricity. The ICMS in all states has registered growth of 10% compared to last year.

According to the secretary, Complementary Law 194/22 impacted revenue. With the end of the effects on fuel and energy, this restored the states’ revenue in general. “We had a structural change. These elements repositioned revenue, but it is not a phenomenon exclusive to us. We associate this with the level of employment, which is good, and public policies for recovery, such as Pronampe, and we hope that this phenomenon of increase will be more perennial”, he considered. In August of this year, R$4.98 billion, compared to R$3.73 billion in August last year.

To the expenses increased due to the need for greater support for the population at this time of reconstruction. Furthermore, since the suspension of the debt with the Union, the State stopped transferring R$783 million to the National Treasury, directing this amount to the Rio Grande Plan Fund.

Until August, they were executed R$1 billion in expenses directly related to the calamitywith emphasis on emergency fund-to-fund actions (R$ 282 million), the Volta por Cima Program (R$ 225 million), transfers to the hospital network (R$ 117 million) and Pronampe Gaúcho (R$ 100 million) .

According to Pricilla, the Rio Grande do Sul economy proved to be resilientbut that does not mean that it is not suffering the effects of the calamity. “We realize that the economy has stabilized at a lower level, this is a loss of capital. It is at this point that we have to focus on reconstruction from now on. I say that we are in a state of permanent calamity”, he pondered.

Regarding prospects for the future, Sefaz believes that fiscal results until the end of the year will depend on the behavior of tax collection and the impacts arising from reconstruction actions. Furthermore, with Law 206/2024, which authorizes the Union to postpone the payment of the debt of federal entities in the event of climate disasters, the Fiscal Recovery Regime also had the review of its plan postponed, while, in parallel, debates continue federative decisions on Propag, which is being processed urgently in the Chamber of Deputies and could influence the next balance sheets.

When asked whether the surplus could reflect salary increase for civil servants or adjustment of career, the secretary considered that the package approved by the Legislative Assembly for salary increases is already quite robust and was made at the right time.

Sefaz considers that suspension of debt with the Union will bring breathing space to the State

In total, the suspended installments of the debt with the Union for a period of 36 months are estimated at R$ 14 billion, which will only be updated by the IPCA and reincorporated into the outstanding debt balance in 2027. The positive effect of this change could be R$ 19 billion due to the non-accrual of interest during the period. Therefore, it is as if the State did not need to bear the suspended R$14 billion because the amounts to be forgiven are higher (R$19 billion). With the effects of Complementary Law 206, there is a reduction in the outstanding balance of R$5 billion. “Although we were unable to obtain debt forgiveness, we achieved good flexibilitywhich will allow us to invest in the State during this period”, projected Pricilla.

The renegotiation of debt charges with the Union is the subject of discussion in Complementary Bill (PLP) 121/2024, already approved in the Senate, on the Program for Full Payment of State Debts (Propag). The text proposes payment of the debt in 360 months with charges equivalent to the IPCA, plus real interest that varies from 0% to 2% per year, depending on conditions assumed by the entities.

The project provides eight alternatives for membership, which include extraordinary amortization of contracts and investments in specific areas. It also provides for a Federative Equalization Fund (FEF), which will receive contributions from the States and will be returned to the entities based on the State Participation Fund. With contributions to the FEF, the State gives up part of its resources, making outward disbursements effectively between 1% and 3% (even if interest is 0% to 2%).

Payment of court orders increases until August

To face one of the State’s main liabilities, record payments of court orders continue. In addition to resources from the Treasury, in 2024, there was already an inflow of R$401 million from the Inter-American Development Bank (IDB), through the Pró-Sustentabilidade program. As a result, the State has already paid R$804 million in court orders until August 2024 and should surpass, by the end of the year, the volume of payments from 2023, which had already been a record.

Check the results of public accounts for the second four months of the last four years (in billions of R$):

Check the ICMS collection in the eight months of 2023 and 2024 (in billions R$)