Brazil Treasury Offers Relief to Indebted State Governments

Paulo Trevisani – The Wall Street Journal, 06/20/2016

Brazil’s Finance Ministry cut a deal with financially strapped state governments on Monday to alleviate high debt-service costs that have forced them to slash spending on critical public services such as policing, education and health care.

The federal treasury, which is the main creditor to Brazilian states, granted state governments a six-month grace period during which they won’t have to pay interest and amortization charges on their debts. Payments to the treasury are scheduled to gradually resume over the subsequent 18 months.

Finance Minister Henrique Meirelles said the deal would cost the government 50 billion reais ($14.7 billion) over the next three years, an amount officials say was already factored into budget plans.

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