After a period of impasse, the governor of Rio de Janeiro, Cláudio Castro (PL), announced this Tuesday (21) an agreement that guarantees the definitive adhesion of the state to the RRF (Tax Recovery Regime), the federal aid program for federation units with cash difficulties.
“The PGE [Procuradoria-Geral do Estado] and the AGU [Advocacia-Geral da União] have just informed the STF [Supremo Tribunal Federal] the formalization of the agreement that guarantees the definitive adhesion of RJ to the regime”, said Castro on social media.
“It is a big step towards the balance of state accounts in the next ten years”, he added.
The scheme offers relief from the payment of states’ debt to the Union and other creditors. On the other hand, these federation units have to adhere to fiscal adjustment measures.
State governments need to commit, for example, to carrying out concessions, privatizations and other measures to stimulate revenue and reduce expenditures.
At the same time, they have to respect prohibitions on the creation of new positions, increases and increases in expenses.
Rio had been facing resistance to formalize its adhesion to the program. In January, the Treasury and the PGFN (Prosecutor General of the National Treasury) came to express their rejection of the text of the Rio de Janeiro government, which in practice would make the rescue measures unfeasible.
The assessment at the time was that the document did not provide sufficient guarantees of cost containment. The initial plan provided for salary increases in all years of the recovery regime.
After the denial, the state had to make changes to advance in the negotiations. In February, the STN (Secretariat of the National Treasury) pointed out that, after the plan was revised, the automatic adjustments were withdrawn from 2023, which weighed on the body to approve the document with reservations.
The Tax Recovery Regime was created in 2017, and Rio was the only participant in the first phase of the initiative.
The program underwent changes in Congress, sanctioned by President Jair Bolsonaro (PL), which forced the new formalization.
Bolsonaro’s ally, the governor is a pre-candidate for the same position in the 2022 elections. After the initial setback in the Rio de Janeiro plan, he even said in January that barring entry into the tax recovery regime would be “evil” to Rio.
“Therefore [acordo para adesão do RJ]we are guaranteeing more investments for our state, resources for essential areas, such as security, health and education, in addition to the timely payment of servers and suppliers”, said Castro this Tuesday.
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