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MG. RS and RJ considered “Broken” since 2015 and the relief of public accounts after the 2021 pandemic

It is normal for there to be changes in the financial status of states and municipalities across the country. Depending, basically, on the balance of collections and periodic expenditures on public accounts made by governments, the economic situation can vary greatly in these places.

Many times, a state that is in a critical financial situation can recover and improve its public accounts. This is exactly what happened with the states of MG, RS and RJ. Considered “broken” since 2015, they have improved this situation in the context of the pandemic and now have a more comfortable situation.

What this article covers:

MG, RS and RJ: What is the relief of public accounts for 2022?

This situation can be observed thanks to the relief of public accounts that these three states achieved in recent months. Despite the unquestionable improvement, analysts emphasize that the situation is not entirely calm.

The debt of the three states has decreased, but it still exists. Rio de Janeiro, for example, noted a decrease from 282% (in 2019) to 197% (2021) in the ratio between net debt and net current revenue of the state. In Rio Grande do Sul, the drop was from 224% to 184% and, in Minas Gerais, from 192% to 162%.

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Complementary Law 173, approved in 2020, was a factor that greatly helped this scenario of improvement in the public coffers of the states. That’s because it guaranteed a transfer of R$ 76 billion, of which 62% went to the states and the Federal District.

This amount was guaranteed to compensate for the drop in revenue expected for 2020. In practice, this drop was around R$ 28 billion, which generated a positive balance in relation to the money transferred by the Federal government??

Economic effect in an election year

Analysts, however, point out that it is unlikely that the situation will remain favorable in an election year, as is the case in 2022, as there is usually an increase in state spending associated with the electoral race.

Anyway, the states are arriving with cash in the election year, which in any case is a positive thing.

Payment of civil servants

Part of the good economic results noted by the states of MG, RS and RJ is also linked to the freezing of readjustments for civil servants, something that was also ensured by Complementary Law 173.

This situation meant that public servants have not had a readjustment for almost two years. This directly contributes to the containment of general expenses of the states, which consequently improves the fiscal situation.

All this made the economic situation improve in the three states, but some specialists point out that the situation should not be maintained for a long time, since we are in an election year. It’s wait and see.

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