Treasury will be guarantor of PPPs in states and municipalities – 04/19/2023 – Market

The government of Luiz Inácio Lula da Silva (PT) will announce on Thursday (20) measures to encourage investments, such as the endorsement of the National Treasury for public-private partnership projects and concessions made by states and municipalities, said this Wednesday (19 ) Secretary of the Treasury, Rogério Ceron.

In an interview with GloboNews, Ceron also said that another measure to be announced is the expansion of the possibility of issuing incentivized debentures for social infrastructure projects, such as building schools and preserving parks.

“What we are going to do is for the Treasury to offer the endorsement, the guarantee in these operations. So if that State or municipality does not honor the obligation of the PPP — that is, the private sector went there, made the investment, the service is provided and the State goes there and does not pay for a political issue or some cash flow problem — the Treasury goes there, honors the obligation and then triggers the counter guarantee against the State, which is what happens today in a credit operation with States and municipalities”, he said.

“It could exceed R$ 100 billion in investments in these partnerships”, he predicted.

Ceron also said that the government will expand the incentivized debenture instrument — a debt security that benefits from tax exemption — for social infrastructure projects. Currently, the mechanism is used in economic infrastructure projects, such as energy generation and transmission, construction of highways and railways, basic sanitation, among others.

“You stimulated private infrastructure and did not stimulate social infrastructure, which directly affects the population,” he said.

In the interview, Ceron also defended the proposal for a new fiscal framework, sent the day before by the Minister of Finance, Fernando Haddad, to the National Congress, and said that the text was built to last over time.

“(The fiscal framework) was built to be a rule that accommodates different economic and political cycles and remains in time. If the rule is not broken, the Brazilian fiscal problem, I have no doubt, will be solved in the medium and long term”, he said.

Ceron said that, with the approval of the framework, public debt should reach a stable trajectory in 2026 or, in the most pessimistic scenario, in 2029.

Asked about the current level of interest rates — the constant target of criticism from President Luiz Inácio Lula da Silva, his allies and members of the government — Ceron said he preferred not to comment on monetary policy.

He stated, at the same time, that interest rates are above their historical average and, as Secretary of the Treasury, responsible for fiscal policy, he always considers that interest rates are high. He also said he hoped for a reduction in the rate, currently at 13.75%, and promised to work to help lower it.