RJ modifies plan to approve adhesion to the new Tax Recovery Regime

After receiving negative opinions from the National Treasury Secretariat (STN) and the National Treasury Attorney General’s Office (PGFN), bodies linked to the Ministry of Economy, for its Fiscal Recovery Plan, Rio de Janeiro presented this Monday (21) ) a new version of the document.

With it, the state will try to approve the adhesion of the new Tax Recovery Regime, in which it intends to remain for a period of nine years.

The approval of the plan is evaluated by three bodies: in addition to the two, there is the Supervisory Board of the Fiscal Recovery Regime (CSRRF), the only body to issue a favorable opinion, although it has done so with reservations.

Under current legislation, it is sufficient for one of the three opinions to be negative, for the agreement not to be ratified.

The new version of the plan was published this Monday, in an extra edition of the Official State Gazette. In it, the main change in relation to the previous version is that the forecast of mandatory annual readjustment for the state civil service was excluded. So it will be optional.

There was also a change in the flow of payments and a reduction in the remaining payables forecast for the year following the end of the agreement, which had been perceived by the technicians as a lack of fiscal balance in the announced period.

With the presentation of the new plan, the bodies have 15 days to manifest. At the Ministry of Economy, the demonstrations are expected to take place until Friday (25).

With this, the position of Minister Paulo Guedes could be known as early as Monday (28).

For the state to be able to ratify the agreement, it is necessary to reverse the negative opinions of STN and PFGN technicians.

The changes to the plan came after a round of meetings between Rio de Janeiro State Finance Secretary Nelson Rocha and Esteves Colnago, Special Secretary of the Treasury and Budget.

Rio de Janeiro was the first state to adhere to the Tax Recovery Regime, in 2017. The state needed to adapt a series of legislation to enter into the agreement, valid for three years, renewable for another three.

The recent concession of four blocks by the State Water and Sewerage Company (Cedae) was one of the state’s counterparts for participating in the regime.

However, while the Guanabara Palace tried to renew its permanence in the agreement, the legislation changed the rules for federative entities that intend to adhere to the model.

Now, the agreement lasts for nine years, during which state payments grow progressively. They start at R$13.8 billion and end at R$13.8 billion. According to the Ministry of Economy, the state’s debt with the Union corresponds to 140% of Rio’s Net Current Revenue.

Although the three-year term of the Tax Recovery Regime has expired, the state remains tied to the agreement by virtue of an injunction issued by Minister Dias Toffoli, of the Federal Supreme Court (STF), while it pleads adherence to the new regime model.

Before the agreement, Rio de Janeiro even declared a state of calamity, with works stopped, suppliers without receiving and salaries of the civil service in arrears, in which there was even a campaign to donate basic baskets to serve the servers.