Brazil’s Senate Committee on Economic Affairs is scheduled to vote Wednesday on a proposal that would allow mayors and governors to renegotiate debt during the final four months of their terms. Current Senate rules generally bar state, municipal and Federal District governments from taking out credit in the 120 days before a leader leaves office, with limited exceptions including refinancing bond debt.
The bill, introduced by Senator Renan Filho, would extend those exceptions to debt restructuring and recomposition operations. A report by Senator Eduardo Braga would require governments to publish details on an official website, including calculations of the current debt’s value, comparisons with the proposed operation, annual payment schedules for both arrangements and significant changes to financial terms.
Renan Filho has argued that the measure would give incoming or re-elected governors more favorable options for restructuring state debt. He said new borrowing would remain subject to Treasury rules and safeguards intended to ensure fiscal prudence during elections.
The proposal was requested for the committee’s agenda by Senator Omar Aziz, who was elected governor of Amazonas. Braga said Aziz had urged caution because of deadlines set by the National Treasury Secretariat. A temporary administration led by Roberto Cidade had previously received approval to borrow 1.4 billion reais, but the process was not completed.
Senators backing the change also point to the time required for negotiations with the Treasury, which can take months or longer. Senator Leany Lemos said a quick process could take a year to a year and a half, and that negotiations stop once the election-period restrictions begin. The existing ban is intended to prevent outgoing administrations from leaving financial burdens to their successors, she added.
The committee had been due to vote Tuesday, but the matter was postponed after a collective request for more time to review it, led by Senators Eudócia Caldas and Izalci Lucas. The bill is not being considered under a procedure that would make the committee’s decision final, so it would still need to go to the Senate floor. As a Senate resolution, it would not require presidential approval.
Sources: Folha Mercado.