A proposal of change in the interest rate and in the price index applied on the efinancing debt of the Brazilian States with the Federal Government

Abstract

ABSTRACT The conditions established on the refinancing contracts of debts of the Brazilian States with the federal government signed in the late 90’s, under the Law 9.497/97, today are very strong. That is because a wide range of factors in the economic and institutional environment in Brazil has changed since then, and in general, these changes were very positive. Some clauses need to be changed in order to avoid some imbalances and to encourage a faster economic growth promoted by investments in infrastructure at the state level. For this, we outline a plan to make it possible to replace the price index and reduce the interest rates applied to the contracts, based on a replacement of National Treasury bonds in the market and on a designing of an account book for the conversion of the debt of the states, then a transfer to the states of the current interest rates practiced in the market of government securities, in replacement to the current charges, keeping fiscal responsible practices in the country. Key words Brazilian states’ debt; public debt; debt refinancing. Artigo recebido em jun. 2012.