LatinNews Daily - 20 January 2022

In brief: Rio’s fiscal recovery plan rejected in Brazil

* The governor of the Brazilian state of Rio de Janeiro, Cláudio Castro, has requested a 15-day extension to present the federal economy ministry with a new fiscal recovery plan, after the state’s request to be maintained in the regime of fiscal recovery (RRF) was denied by authorities in the national treasury. Rio state has adhered to the RRF since 2017 – the regime allows bankrupt states to suspend their payments to the federal state in exchange for fiscal adjustment measures. Recent changes to the law regulating the RRF led the Castro administration to present a new fiscal recovery plan last year, which would last nine years and during which Rio state would pay back R$78bn (US$14.3bn) to the federal coffers. But the plan was rejected by the national treasury, and Castro has now requested a two-week extension from Economy Minister Paulo Guedes to provide clarifications on the state’s recovery plans, although he admits the possibility of making adjustments to the plan if necessary. According to the Rio state government, it owes the federal state R$176.8bn, the full payment of which is expected to be completed in 30 years (by 2051).  

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