Treasury runs out of resources for state and municipal actions – 08/01/2023 – Panel

The Treasury no longer has a limit on the resources available to guarantee new credit operations by state and municipal bodies and entities, which should lead the CMN (National Monetary Council) to deliberate on the subject and open up more financial space.

According to data available on the Central Bank website, the R$ 6 billion guaranteed by the Union set by the CMN for contracting credit operations to public sector bodies and entities ran out on July 31.

Government interlocutors say that the lack of resources may even threaten future projects by states and municipalities, including the expansion of the BRT in Rio de Janeiro —an event scheduled for August 10 will be attended by President Luiz Inácio Lula da Silva (PT).

According to Rio’s Municipal Secretariat for Finance and Planning, a R$ 1.2 billion credit operation has already been negotiated with Banco do Brasil for the requalification of the BRT system, in a contract signed in April this year.

However, in addition to this loan, “there is also a credit operation to be signed with Caixa Econômica Federal, with a Union guarantee, in negotiation worth R$ 645 million”, he informed, in a note. The operation will be destined to the acquisition of new articulated buses.

Credit operations guaranteed by the Union are a way for states and municipalities to contract loans with lower interest rates.

To have access to the guarantee, they need to formalize a request for analysis of the operation with the Treasury. The Treasury then evaluates a series of factors, such as debt limit, credit operations already contracted and counter-guarantees offered.

If successful in obtaining the guarantee, the entities can use it to get better conditions at the financial institution with which they have a bond.

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