Haddad raises his tone against Zema and says that MG’s debt grew due to “defaults” by the state

The Minister of Finance, Fernando Haddad (PT)the governor of Minas Gerais responded again, Romeu Zema (New)in a discussion on X (formerly Twitter).

Responding to the statement that the state had done “its homework” to control its fiscal situation, Haddad stated that Zema was responsible for a 55% increase in mining debt from 2018 to 2024.

“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, on 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”, wrote Haddad on the social network.

On Thursday (16), the minister had already gone to X to rebut Zema’s criticisms of the sanction with vetoes of the state debt renegotiation bill, the Program for Full Payment of State Debts (Propag). Shortly afterwards, in response to Haddad, Zema published: “Contrary to what happens at Palácio do Planalto, Minas did his homework. For the fourth year in a row we have balanced accounts, that is, since 2021 with zero deficit, even though we have already paid more than R$8 billion in debt to the Union”.

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This Friday, Haddad stated that, at the end of 2023, the Minas Gerais government continued to not pay private creditors on time, with more than R$5 billion in outstanding payments from previous years and a negative net cash balance of R$5 billion. This, he said, shows that “the state does not have the money to pay its expenses, and was defaulting not only on the Union, but on other private creditors of the state as well.”

“The fiscal challenges are many for everyone, without a doubt, but we are from the camp that believes that default cannot be confused with fiscal adjustment! There are even those who think differently, as we have seen in the recent past, but we believe in the importance of the Brazilian state setting an example and paying its obligations on time”, stated the minister.

Haddad said the government agreed to Propag to “ensure that States that do not honor their obligations can finally find a path to true fiscal adjustment.

“It is a great gesture and a great fiscal effort by the Union in favor of the Brazilian States, especially for the people of Minas Gerais”, he wrote.