The Union has repaid about R$3.5 billion of Minas Gerais state debt in 2023.

Throughout 2023, the Union repaid a total of R$3.56 billion of Minas Gerais state debt. In December alone, the federation repaid R$1.52 billion in debts guaranteed by states and municipalities. Among the beneficiaries, the state of Rio de Janeiro topped the list with R$688.39 million, followed closely by the state of Minas Gerais, which had a debt of R$645.10 million paid by the federal executive in the last month of the year.

The data is contained in the Monthly Report of Guarantees Honored by the Union in Credit Operations and Recovery of Counter-Guarantees (RMGH) for December 2023, issued by the National Treasury on Wednesday (31).

Over the course of the year, the Union disbursed a total of R$12.29 billion to satisfy debts guaranteed by subnational entities. The state of Minas Gerais was one of the main beneficiaries, with the union repaying debts worth R$3.56 billion, representing 29% of the total. Minas Gerais was second only to Rio de Janeiro.

Since 2016, the Union has disbursed R$63.98 billion to fulfill guarantees in credit operations from states and municipalities. The lower collateral recovery is largely attributable to the inclusion of states in the Recovery Fiscal System (RRF).

When a state or municipality fails to meet its obligations in a credit operation, the national treasury assumes the debt. In response, union transfers to the debtor federal entity are halted until the difference is paid, which includes penalties and interest. However, in some cases, court decisions grant suspension of debt payments, as is the case in the state of Minas Gerais.

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