Crisis-Hit Brazil Threatened by $89 Billion State Debt Time Bomb
- Supreme Court injunction changed interest on S.Catarina debt
- Other states expected to follow suit, demand same treatment
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Amid the worst political crisis in decades, Brazil’s federal government also faces a spiraling state debt crisis that could cost it as much as $89 billion in lost revenue.
Brazilian states, hit by a two-year recession that has depressed tax revenues, are seeking to apply simple rather than compound interest on debt owed to the federal government. The change could cost the Treasury 313 billion reais, according to Finance Ministry calculations.