Rio Signs Law to Join Propag, Starting Exit From Fiscal Recovery Regime

Overview

• Published in the state gazette on December 26, the law authorizes Rio’s adhesion to Propag and requires the Executive to ask for termination of the RRF.
• Supreme Court Minister Dias Toffoli extended for six months measures that keep Rio in the RRF and suspend federal sanctions to enable an orderly transition.
• The state plans to send its adhesion request to the National Treasury by December 31, after which the Treasury has 30 days to present a refinancing contract with the rate defined by the chosen amortization.
• Propag replaces RRF’s IPCA+4% indexation with rates that can go as low as IPCA+0% and demands upfront debt amortization and stricter fiscal conditions, with FNDR resources available for immediate abatements.
• Rio reports a R$225 billion debt (R$193 billion to the Union), while the Union cites R$232.5 billion consolidated; the statute also caps spending growth by IPCA with additions tied to revenue and permits using state real estate and oil royalties to amortize debt.