São Paulo – The Brazilian federal government has enacted new rules for debt payments to the federal government by states and municipalities. On Tuesday (29), the government changed the indexers based on which debts are calculated.
From January onwards, state and municipal debts will be adjusted based on the Extended Consumer Price Index (IPCA), a measure of official inflation, or by the benchmark interest rate, whichever is the lowest, plus a 4% per annum rate. Currently, the calculation is based on the IGP-DI index plus a 6% to 9% per annum rate.
The change had previous approval from National Congress. At a meeting with the Finance minister Nelson Barbosa last Tuesday, governors from ten states pleaded for approval, since dwindling tax collection this year has put pressure on states’ accounts.
*Translated by Gabriel Pomerancblum
