The Brazilian government said it will temporarily suspend debt payments from states with financial difficulties, according to a tax recovery regime published by the Ministry of Finance on Dec. 14.
The measure would authorize states to enter debt restructuring with financial institutions. On the other hand, it would not allow states to contract new credit operations during the recovery regime.
The measure, which would have voluntary membership, requires approval from the Brazilian Congress before it can be enacted.
Three Brazilian states have declared a state of financial calamity so far: Minas Gerais, which controls Banco de Desenvolvimento de Minas Gerais SA, Rio Grande do Sul, which controls Banco do Estado do Rio Grande do Sul SA, and Rio de Janeiro.