Brazil’s Supreme Court is to begin ruling Wednesday on a case that will either torpedo the federal government’s budget or leave cash-strapped states struggling to pay for basic services.
At stake is whether three states -- Minas Gerais, Rio Grande do Sul and Santa Catarina -- will be allowed to re-calculate their debts using simple rather than compound rates. A ruling in their favor would pave the way for all debtor states to be granted the same treatment, setting the federal government back 402 billion reais ($114 billion), according to estimates by the Finance Ministry.
