Taxpayers’ debts would reduce only 10% of court-ordered debts in 2022

Minister Paulo Guedes’ team (Economy) mapped around R$ 7 billion in court orders (amounts to be paid by the State by court decision) for 2022 that could be used by creditors to reduce their debts with the Union.​

The so-called meeting of accounts is one of the bets of the Jair Bolsonaro (PL) government to try to avoid a snowball of precatório after the enactment of the PEC (proposed amendment to the Constitution) which allows the postponement of part of these commitments.

The estimate represents just over 10% of the BRL 62.2 billion in court orders presented for next year, not including the so-called RPVs (Small Value Requisitions), which give debts of up to 60 minimum wages, owed to small creditors and that will need to be paid without easing.

The amount is also less than the R$43.8 billion in court orders that must have payment postponed to subsequent years, thanks to the new rule enacted by Congress.

The survey shows that, initially, the scope of this method of matching accounts is more limited than the potential indicated by the Ministry of Economy. Until two weeks ago, the folder pointed to R$ 918 billion in debts inscribed in active debt that could serve as a bargaining chip for court orders. The amount includes debts whose recovery is assessed as feasible.

However, not all debtors of the Union are also creditors of court orders, which makes the possibility of meeting accounts more restricted. Other measures provided for in the constitutional amendment, however, can help reduce liabilities.

From now on, the government has authorization to accept the precatório as payment currency in the sale of public real estate and in the discharge of concessions in infrastructure concessions. The credits may also be used to acquire shares of state-owned companies and to purchase rights to the Union’s share in the oil surpluses extracted from the pre-salt.

Guedes’ strategy is to use the PEC as a shortcut to reduce the size of the State, making banks and even law firms work to optimize the use of federal assets that, in his view, are at a standstill.

The minister treats the proposal as an alternative for the transformation of the State and believes that it is better to use these assets as a bargaining chip than to issue debt and make the country pay interest in order to be able to honor the payments required by the courts.

Since the beginning of the processing of the PEC dos Precatório, economists, lawyers and members of the financial market have criticized the changes, classifying them as a default in judicial debts. Calculation by the Chamber’s Budget Consultancy points to the risk that the new limit for court orders will end up generating a liability of BRL 121.3 billion by 2026, the last year of validity of this rule.

In an attempt to overcome resistance, the Ministry of Economy argues that a good part of this liability will disappear precisely because of negotiations involving assets. An internal survey used to support this argument shows a potential of R$235.6 billion in real estate that could be sold in exchange for court orders.

Government estimates also indicate the possibility of concession grants reaching R$31.79 billion in 2022. The sale of future rights over the pre-salt oil surplus that currently belongs to the Union is valued at R$192. billion.

For the economic team, the offer of these assets would be enough to take the risk out of the snowball, because the lawsuits that represent probable risk —when the probability of loss is high— have a smaller impact, of R$ 277 billion.

The value does not include actions related to tax issues, which payment is made through compensation — the company deducts the value of taxes to be paid from now on. Of this amount, R$ 140 billion are linked to actions on Fundef, the basic education fund that supplied states and municipalities until 2006.

The government argues that states in the North and Northeast regions —which are among the creditors of Fundef’s judicial orders— hold a debt of R$ 143 billion with the Union. expenses, the rule that limits the advance of expenses to the variation of inflation. That should discourage negotiations on that front.

With other creditors of the Union, the economy’s expectation is that the use of these instruments will gain traction over the years, since the queue of precatories will foster the market for the purchase and sale of these credits. Even if the creditor does not have debts with the Federal Government and is not interested in acquiring assets, it may assign its credit to companies or investors interested in the modalities proposed by the government.

In this way, the creditor leaves the queue and receives first, albeit with a discount that, in practice, reduces the amount pocketed. The buyer pays less for a credit that will later be used to reduce debt or acquire assets.

The president of the OAB (Brazilian Bar Association) Commission on Precatory Orders, Eduardo Gouvêa, says that the incentive for negotiations is positive, but it could be done without postponing precatório, a measure he considers unconstitutional.

The entity must file an ADI (Direct Action of Unconstitutionality) in the STF (Supreme Federal Court) to question the ceiling for sentences. “The government is making it difficult to force the creditor to join a program in which he will receive less. He wasted time [com a tramitação judicial], now he’s going to lose money too,” he says.

The OAB representative defends the creation of a negotiation program that concentrates efforts on actions that have already become final, but whose payment has not yet been made.

According to him, a court order takes, on average, three to five years to be issued. But there are cases where the delay lasts more than a decade. “Who needs to wait a year and a half [para receber] is less likely to accept a discount than someone who will have to wait four years,” says Gouvêa.

Leonardo Ribeiro, a consultant to the Senate, also advocates that the government create a program to offset debts with court orders. He suggests following the experience of states and municipalities, with clear regulations on the subject. “The reduction in the stock of court orders will depend on the result of these transactions,” he says.

Even so, Ribeiro defends greater rigidity in monitoring the evolution of legal debts. “There is a risk of snowballing if the growth rate of court orders remains high as in recent years,” he says.