Governors want to use Covid-19 pandemic to relieve past debt

The Covid-19 pandemic is being used by governors from states in Brazil’s South and Southeast to reduce their budget deficit. In a letter addressed to President Jair Bolsonaro, the seven-state group made a series of requests, such as including spending with pensions for retired healthcare and education professionals in the budget earmarked for anti-Covid-19 investment.

In practice, the measure relieves the pressure on pensions in these state’s public deficit — while reducing the amount available for investments in schools, hospitals, and training for teachers and health professionals. Here are the main requests:

• Compensation from the federal government for tax revenue lost due to the economic slowdown;
• Suspension of states’ debt payments to the federal administration for 12 months;
• The approval of an economic rescue bill.

Weighing against the governors is the fact that President Bolsonaro has waged a war against state administrations over social isolation measures enforced by governors despite the president’s wishes to bring the economy back to normality. Last week, Mr. Bolsonaro even blamed governors for the crisis. Moreover, nobody has antagonized the president as much as João Doria and Wilson Witzel, the governors of southeastern states São Paulo and Rio de Janeiro, respectively.

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