Insider

Congress leaders, Supreme Court to discuss government debt

Congress leaders, Supreme Court to discuss government debt
Senate President Rodrigo Pacheco. Photo: Leopoldo Silva/SF/CC-BY 4.0

Brazil’s Senate President Rodrigo Pacheco said he will meet with Supreme Court Chief Justice Luiz Fux and House Speaker Arthur Lira tomorrow to find a solution regarding the government’s sizable total of court-ordered IOUs, known as precatórios.

In 2022, the government is duty-bound to pay BRL 89 billion (USD 17 billion) related to lost litigation. The Economy Ministry, however, says that would drain the funds for social programs and put salaries of civil servants at risk. The government has asked for its precatórios to be spread out over dozens of installments, which markets treat as a de facto default. 

Another idea on the table involves using the National Justice Council — a sort of ombudsman for the Judiciary — to broker a deal capping yearly precatórios, using 2016 as a point of reference. 

The limit would be adjusted for inflation every year, providing the sitting administration with increased budget predictability. The move could reduce the amount due in 2022 from the current BRL 89 billion to nearly BRL 40 billion.