Minister of Finance says that Minas Gerais debt rose during the Novo administration and that the State defaulted on more than R$30 billion owed to the federal government
The Minister of Finance, Fernando Haddad, and the governor of Minas Gerais, Romeu Zema (Novo), carried out an exchange of public criticism on social media regarding the fiscal situation in Minas Gerais and the sanction of the Program for Full Payment of State Debts (Propag ). The law, which refinances state debts with lower interest rates, was sanctioned with vetoes by President Luiz Inácio Lula da Silva (PT), generating discontent among opposition governors. Upset, Haddad stated that, between 2018 and 2024, Minas Gerais’ debt grew 55% under Zema’s management. He attributed the increase not only to interest, but also to defaults in payments, which total more than R$30 billion to the Union, R$12 billion to financial institutions and additional amounts to private creditors. “The State is one of the most indebted in the country, with a brutal increase in debt”, declared the minister.
According to Haddad, at the end of 2023, Minas maintained R$5 billion in outstanding payments from previous years and a negative net cash balance of the same value. He criticized Minas Gerais management for delays in payments, emphasizing that “default cannot be confused with fiscal adjustment”. “The debt grew not only due to interest, but due to default in payments. During its government, the State defaulted on more than R$30 billion owed to the federal government, plus another R$12 billion with financial institutions, in addition to defaults on other private creditors, making the State one of the most indebted in the country and with brutal debt growth”, said the minister.
Zema had stated that Minas Gerais has maintained balanced accounts since 2021, with zero deficit, and that the State has already paid more than R$8 billion in debt to the Union. The governor accused the federal government of wanting to “force the miners to pass on R$ $5 billion more in 2025 and 2026” while maintaining “superfluous expenses, privileges and perks.” He also criticized the vetoes on Propag, which include measures that, according to him, favored the States. In response, Haddad argued that the Minas Gerais governor had requested a renegotiation agreement smaller than that sanctioned and pointed out inconsistencies in the criticism, mentioning that the politician affiliated with the Partido Novo sanctioned a 298% increase in his own salary.
The law sanctioned by Lula aims to help indebted states refinance their debts under more favorable conditions, but Lula’s vetoes excluded provisions that would transfer state debts with private banks to the Union. Haddad defended the vetoes, classifying them as necessary for fiscal responsibility and stating that Propag offers states an opportunity to achieve a real fiscal adjustment.
The debate reflects tensions between the federal government and state managers, especially in a context of economic challenges and political disputes. Opposition governors, such as Romeu Zema, Cláudio Castro (PL), from Rio de Janeiro, and Eduardo Leite (from Rio Grande do Sul), have criticized the Lula government for issues related to the financing of States and the conduct of fiscal policies.
Published by Felipe Dantas
*Report produced with the help of AI
