PROVISIONAL MEASURE N ° 2,118-30, DE April 26, 2001

Establishes criteria for consolidation, assumption, and refinancing, by the Union, of the furnished public debt and other which specifies, of responsibility of Municipalities.

THE PRESIDENT OF THE REPUBLIC, in the use of the attribution that confers you the art. 62 of the Constitution, adopts the following Interim Measure, with force of law:

Art. 1º It shall be the Union authorized, until June 15, 2000, to take over the following Municipalities' liability obligations:

I-debt together with domestic or foreign financial institutions, whose contracts have been firmed up to January 31, 1999, including the stemming from transformation of early budget revenue anticipation operations in debt founded ;

II-debt together with domestic or foreign financial institutions, arising from assignment of credit firmation until January 31, 1999 ;

III-internal furnished debt constituted up to December 12, 1995 or which, constituted after that date, consubstantive simple rollover of previous mobiliary debt ;

IV-external furnished debt constituted until December 12, 1995 or which, constituted after that date, consubstantive simple rollover of previous mobiliary debt ;

V-debt relative to budget revenue anticipation operations, contracted up to 31 million January 1999 ; and

VI-debt relative to credit operations celebrated with financial institutions in quality of financial agent of the Union, States or of funds and government programmes, regularly constituted.

§ 1º For the purpose of incisos I, IIl, V and VI, only registered operations will be considered, until January 31, 1999, at the Central Bank of Brazil.

§ 2º Powers to be still subject of assumption by the Union the debts of constituent entities of the indirect municipal public administration, framed in the incisos I to VI of the caput and which are previously taken over by the Municipality.

§ 3º The service of the debts mentioned in the incisos I, lI, V and VI of the caput of this article, unpaid and with maturity or any form of chargeability that has occurred between January 31, 1999 and the date of signing of the refinancing contract may be refunded by the Union, observed the conditions set forth in this Measuring Provisional, except for:

I-term: by up to one hundred and eighty months, with monthly and consecutive instalments, winning over first on the date of signing of the refinancing contract and, the other ones, on the due dates stipulated for the remainder of the debts refunded to the amparo of this Provisional Measure ;

II-charges: equivalent to the average cost of caption of government internal furnished debt Federal (SELIC fee), plus, in case of inadimpletion, of moratorial interest of one per cent per year, on the previously updated debtor balance ;

III-extra-limit on the other debts refunded in the form of this Provisional Measure and the Law # 8,727, of November 5, 1993 ; and

IV-minimum monthly amortization of R$ 1,000.00 (thousand reais), additionally to that provided for in § 1º of the art. 2º.

§ 4º It will not be covered by the assumption referred to in this article nor by refinancing to which refers to the following article:

I-the debts renegotiated on the basis of the Laws 7,976, December 27, 1989, and 8,727, of 1993 ;

II-debts relating to the external divide object of renegotiation within the framework of the Brazilian Plan of Financing of External Debt (BIB, BEA, DMLP and Club of Paris) ;

III-the parcels of the debts referred to in the incisos I, II, III, V and VI of the caput of this article that have not been disbursed by the financial institution until January 31, 1999 ; and

IV-external debts along to multilateral international bodies or agencies foreign credit government.

§ 5º The assumption that it treats this article will be preceded by the application of the toll on the balance debtor of the obligations, as established by the Executive Power.

§ 6º It may still be the Union, in the respective maturities, to provide the necessary resources to the payment of the debt that treats the inciso IV of the caput of this article, incorporating the value paid to the debtor balance of the refinancing.

Art. 2º The debts taken over by the Union will be refunded to the Municipalities, observing the following:

I-deadline: up to three hundred and sixty monthly and successive instalments, calculated on the basis of Table Price, winning the first in up to thirty days after signing the contract and the following in equal days of the subsequent months ;

lI-interest: calculated and debited monthly, at the rate of nine per cent per year, on the balance previously updated debtor ;

III-monetary update: calculated and debited monthly on the basis of the index variation Price General-Internal Availability (IGP-DI), calculated by the Getúlio Vargas Foundation, or other index that comes to replace it ;

IV-appropriate guarantees that will necessarily include the linking of own revenue and of the resources of which they treat the arts. 156, 158 and 159, inciso I, "b", and § 3º, of the Constitution, and the Supplementary Law No. 87 of September 13, 1996 ;

V-limit of commitment of thirteen per cent of Real Net Revenue-RLR, for the purpose of service of the obligations corresponding to the service of the refnancial debt ;

VI-in the event of non-compliance with the paced obligations, without prejudice to the other cominations contractual, the charges referred to in the incisos II and III will be replaced by the average adjusted rate of the daily financing established in the Special Settlement and Custody System (SELIC), released by the Central Bank of Brazil, increased by a per cent per year, raising by four percentage points the commitment limit set in the earlier incision ;.

VII-in the event of impunctuality in payment, without prejudice to the application of the provisions in the inciso prior, the value of the benefit

will be updated by the adjusted average rate of the daily funding ascertained in SELIC, released by the Central Bank of Brazil, and increased from interest rate of one per cent per year, calculated pro rata die; and

VIII-pass on to the Municipalities of the death applied to the obligations assumed by the Union.

§ 1º For the establishment of the deadline, the minimum of R$ 1,000.00 (thousand reais) will be observed for the initial value of the monthly redemptions of the refinancing contract.

§ 2º The elevation of the commitment limit will be applied from the subsequent provision to the discompliance

§ 3º The additions to which inciso VII are concerned are not subject to the limit of commitment of the RLR.

§ 4º The interest rate can be reduced to:

I-seven integers and five tenths per cent, if the Municipality amortizes extraordinarily value equivalent to ten per cent of the updated debtor balance of the debt taken and refunded by the Union ; and

II-six percent if Municipality amortizes extraordinarily worth equivalent to twenty per one of the updated debtor balance of debt assumed and refunded by the Union.

§ 5º The reduction referred to in the preceding paragraph shall be applied as of the date of the integralization of the special amortization percentage correspondent.

§ 6º Do not apply to the extraordinary amortization of which it treats § 4º of this article:

I-the willing on art. 5º; and

II-the limit he commitment of RLR.

§ 7 The liability debts of Municipalities with the Union, except for those relating to taxes and .contributions, contracted by January 31, 1999, may be refunded in the form of this Provisional Measure.

Art. 3º The criterion of the Municipality, the debt may be refunded at lower rates than predicted in the inciso II of the art. 2º, provided that the outstanding amortization is effected within thirty months, counted from the date of signing of the respective refinancing contracts.

§ 1º The rates of which treat caput will be:

I-seven integers and five tenths per cent, if the Municipality commits to amortization extraordinarily worth ten per cent of the updated debtor balance of the debt assumed and refunded by the Union ; and

II-six per cent, if the Municipality commits to amortizing extraordinarily worth equivalent to twenty per cent of the updated debtor balance of the debt assumed and refunded by the Union.

§ 2º Fishing the deadline set in the caput and not being performed in full the amortization extraordinary, the debtor balance will be recalculated, from the date of the signing of the contract, by changing the interest rate to:

I-nine per cent, if the Municipality committed in the form of the inciso I of the preceding paragraph ;

II-nine per cent, if the Municipality committed in the form of the inciso II of the preceding paragraph and extraordinary amortization has not reached ten per cent of the updated debtor balance ;

III-seven and a half per cent, if the Municipality committed in the form of the inciso II of the paragraph prior and the extraordinary amortization has reached ten percent of the updated debtor balance.

Art. 4º Public securities issued after December 12, 1995, for payment of judicial precatory, in the terms of art. 33 of the Act of Transitional Constitutional Provisions, they may be the subject of the assumption and refinancing to which the preceding articles refer, by observing, in this hypothesis, that the monthly provision of the refinancing contract will correspond, in the minimum, to the proviso that would be due in respect of such securities, calculated by Table Price, for the period of one hundred and twenty months.

Single Paragraph. It will not be covered by the assumption and refinancing referred to in caput the furnished debt in power of the issuer itself, even if by means of liquidity fund, or that it has been placed on the market after December 31 of 1998.

Art. 5º For the purposes of application of the limit set in the inciso V of the art. 2º, may be deducted, from the limit ascertained the expenditure effectively held in the previous month by the Municipality, corresponding to the services of the following obligations by him holder:

I-debt refunded on the basis of Law No. 7,976 of 1989 ;

II-external debt contracted until January 31, 1999, even that object of restructuring river of Brazilian Plan

of Financing of External Debt (BIB, BEA, DMLP and Paris Club) ;

III-partition of debts firsthand on the basis of art. 58 of Law No. 8,212 of July 24, 1991 and in Law No. 8,620 of January 5, 1993 ;

IV-debts parceled together with the Service Time Guarantee Fund-FGTS, whose formalization has occurred until January 31, 1999 ;

V-commission of the agent, incident on the payment of the provision arising under Law No. 8,727, of 1993 ; and

VI-debt on real estate credit refunded to the amparon of Law No. 8,727 of 1993, and effectively taken over by the Municipality, deducted the revenues earned from these operations.

§ 1º Poor, still, be deducted the expenses relating to principal, interest and other charges of the operations under Law No. 8,727 of 1993, carried out in the month, exceeded the commission of the agent.

§ 2º The figures for the reduction of the provision by the application of the limit to which this refers article or by the deduction referred to in the following article will have their payment posterated, on them by focusing on the financial burden on the refinancing contracts, for the time when the debt service commits lower value to the limit.

§ 3º The limit of thirteen per cent set in art. 2º is applicable only for debts refunded under this Provisional Measure.

§ 4º Eventual balance debtor resulting from the implementation of the committed commitment limit in the form of this article, may be refunded under the same conditions as provided for in this Interim measure, up to one hundred and twenty months, from the maturity of the last instalment of the refinancing contract.

§ 5º In the case provided for in the preceding paragraph, the benefits may not be lower than the value of the last instalment of the refinancing.

Art. 6º The amount effectively disbursed by Municipality with respect to the service of the debts mentioned in the incisos I, II, Ill and IV of the art. 1º, won between January 31, 1999 and the date of signing of the refinancing contract, may be deducted from the benefits calculated on the basis of Table Price, limited the monthly deduction to fifty per cent of the value of the first instalment.

Art. 7º For the purposes of this Provisional Measure, it is understood as RLR the revenue realized in the twelve months prior to the month immediately prior to that in which it is being ascertained, observed the following:

I-will be excluded from revenues from credit operations, from cancellation of remains to pay, of disposal of goods, of transfers linked to any title, of voluntary transfers or donations received with the specific end of meeting capital expenditure ; and

II-will be computed the proceeds from the proceeds from the tax collection on Operations Concerning the Circulation of Goods and on Interstate and Intermunicipal Transport and Communication Services Prestations intended for the granting of any tax or financial favours, including in the form of loans or financing, even if by means of funds, financial institutions or other entities controlled by the public power, granted on the basis of the said tax and resulting in reduction or elimination, either directly or indirectly, of the respective burden.

Single Paragraph. The financial surplus of the municipalities and foundations, excluded those of a previdual character, will be considered to eat revenue realized for RLR calculation purposes.

Art. 8º The debt refinancing contract should provide for the Municipality to:

I-will only be able to issue new domestic municipal public furnished debt securities or external, after the integral settlement of the debt subject of the refinancing provided for in this Provisional Measure ; and

II-only be able to contract new debt, including Revenue Anticipation rations Budget, if the total financial debt of the Municipality is lower than its annual RLR.

Single Paragraph. Please exclude from the sealings to which the inciso II refers:

I-the hiring of credit operations instituted by federal programs, intended for modernization and the apparel of the administrative machinery of Municipalities ;

II-the loans or financing with multilateral financial bodies and the foster and cooperation institutions linked to foreign governments, which have positive evaluation of the financial agency, and the National Economic and Social Development Bank-BNDES, provided that they contract within the one-year term counted from June 30, 1999 and intended exclusively for supplementation of ongoing programs.

Art. 9º The RLR's commitment limit that it treats inciso Vof art. 2º will be raised by two percentage points for Municipalities that, as of 1º January 2000:

I-do not have adequate your personnel expenses to the limits set out in the legislation in vigor ;

II-have not deployed previdential contribution to the active and inactive servers, with average aliquot of, at a minimum, eleven per cent of the total remuneration ; and

III-have not limited their expenses quota retirees and pensioners, in the form of legislation in effect.

Art. 10. Only by law may new compositions be permitted, or extensions of the debts refunded on the basis of this Provisional Measure, or, yet, change to any title of the conditions of the refinancing ora established.

Art. 11. The Union shall assume the obligations arising from this Interim Measure Upon Issuance of National Treasury securities ; with characteristics to be defined by the Executive Power.

Art. 12. The revenue from the repayments of the refinancing granted to Municipalities under this Provisional Measure will be used in full for the abatement of the National Treasury's liability public debt.

Art. 13. Stay the Banco do Brasil S.A. designated Union financial officer for the purpose of the conclusion, monitoring and control of the assumption and refinancing contracts of which this Provisional Measure is concerned, with the debtor being paid the payment of the concernant remuneration.

Art. 14. It is the Union authorized to carry out, through the Federal Economic Box, credit operations with Municipalities, intended for programmes to strengthen and modernize the municipal administrative machinery, using for this purpose resources coming from loan contracts with international financial bodies.

Art. 15. It is made available to the Curator Board of the Service Time Guarantee Fund-FGTS, in the assumption of assumption by the Union of obligations concerning FGTS re-passes, pursuant to this Provisional Measure, to authorize financial agents to promote return of the real resources, under the originally established conditions, provided that sufficient guarantees are constituted.

Art. 16. They are invited to the acts practiced on the basis of Provisional Measure No. 2.118-29 of March 27, 2001.

Art. 17. This Provisional Measure enters, in force on the date of its publication.

Brasilia, April 26, 2001 ; 180º of Independence and 113º of the Republic.

FERNANDO HENRIQUE CARDOSO

Pedro Parente