PROVISIONAL MEASURE # 2,185?33, DE June 28, 2001

establishes criteria for the consolidation, assumption and refinancing, by the Union, of the public and other public debt that it 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 on the following obligations of responsibility of Municipalities:

I? debt to domestic or foreign financial institutions, whose contracts have been signed up to January 31, 1999, including the stemming from transformation of budget revenue anticipation operations into debt founded ;

II? debt to domestic or foreign financial institutions, arising from credit cession affirmed until January 31, 1999 ;

III? internal furnishing debt constituted up to December 12, 1995 or which, constituted after that date, consubstantiates simple rollover of previous furnished debt ;

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

V? debt relative to budget revenue anticipation operations, contracted until January 31, 1999 ; and

VI? debt related to credit operations concluded with financial institutions in the quality of financial agent of the Union, States or funds and government programs, regularly constituted.

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

§ 2º Poor is still subject of assumption by the Union the debts of 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, II, V and VI of the caput of this article, unpaid and with maturity or any form of chargeability that occurred between January 31, 1999 and the date of signature of the refinancing contract may be refunded by the Union, observed the conditions set out in this Provisional Measure, except for:

I? deadline: in up to one hundred and eighty months, with monthly and consecutive installments, winning?if the 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 ampairing of this Provisional Measure ;

II? charges: equivalent to the average cost of caption of the Federal Government's domestic furnished debt (SELIC fee), plus, in the event of default, of a per cent moratorial interest on the year, on the previously updated debtor balance ;

III? extra?limit on the other debts refunded in the form of this Provisional Measure and Law No. 8,727 of November 5, 1993 ; and

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

§ 4º It will not be covered by the assumption referred to in this article nor by the refinancing to which the art is referred. 2º:

I? the debts renegotiated on the basis of the Laws n^the 7,976, December 27, 1989, and 8,727, from 1993 ;

lI? debts concerning the external debt subject of renegotiation within the framework of the Brazilian Foreign Debt Financing Plan (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 which have not been disbursed by the financial institution until January 31, 1999 ; and

IV? foreign debts together with multilateral international bodies or foreign credit government agencies.

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

§ 6º It may still the Union, in their respective maturities, provide the necessary resources to the payment of the debt of which it 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 by the Union will be refunded to the Municipalities, observing?if the following:

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

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

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

IV? appropriate guarantees that will necessarily include the linking of own revenue and 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? commitment limit of thirteen per cent of Real Net Revenue-RLR, for the purpose of meeting the obligations corresponding to the refunded debt service ;

VI? in the event of disfulfilment of the paced obligations, without prejudice to the other contractual cominations, the charges referred to in the incisos II and III shall be replaced by the adjusted average rate of the daily funding ascertained in the Special System of Settlement and Custody (SELIC), released by the Central Bank of Brazil, increased by one percent a year, elevating?if at four percentage points the commitment limit set in the inciso V ;

VII? in the event of impunctuality in the payment, without prejudice to the application of the provisions in the inciso VI, the value of the benefit will be updated by the adjusted average rate of the daily financing ascertained in SELIC, disclosed by the Central Bank of Brazil, and increased of interest from one per cent to the year, calculated pro rata die ; and

VIII? pass on to the Municipalities of the deatings 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 discompliance.

§ 3º The additions to which the inciso VII refers are not subject to the RLR's commitment limit.

§ 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 assumed and refunded by the Union ; and

II? six per cent, if the Municipality amortizes extraordinarily value equivalent to twenty percent of the updated debtor balance of the debt taken and refunded by the Union.

§ 5º The reduction referred to in § 4º shall be applied as of the date of completion of the corresponding percentage of extraordinary amortization.

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

I? the willing in the art. 5º; and

II? the RLR commitment limit.

§ 7º The divides of responsibility of Municipalities with the Union, except 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 rates lower than that provided for 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?if you amortize extraordinarily value equivalent to 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?if amortization extraordinarily value equivalent to twenty percent of the updated debtor balance of the debt assumed and refunded by the Union.

§ 2º Fishing the deadline set in the caput and not beingrealized in full the extraordinary amortization, the debtor balance will be recalculated, since the date of signing the contract, changing?if the interest rate for:

I? nine per cent, if the Municipality committed in the form of the inciso I of the § 1º;

II? nine per cent, if the Municipality has committed itself in the form of the inciso II of § 1º and the extraordinary amortization has not reached ten per cent of the updated debtor balance ;

III? seven and a half per cent, if the Municipality has committed in the form of the inciso II of § 1º and the extraordinary amortization has reached ten per cent of the updated debtor balance.

Art. 4º Public securities issued after December 12, 1995, for payment of judicial precatories, in the terms of art. 33 of the Act of Transitional Constitutional Provisions, they may be the subject of the assumption and the refinancing to which the arts refer. 1º, 2º and 3º, watching?if, in this hypothesis, that the monthly instalment of the refinancing contract will correspond, at the very least, to the proviso that would be due in respect of those 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 incumbent upon it:

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

II? external debt contracted until January 31, 1999, even that object of restructuring within the framework of the Brazilian Foreign Debt Financing Plan (BIB, BEA, DMLP and Paris Club) ;

III? partition of debts firsthand based on 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 payment of the proviso arising under Law No. 8,727 of 1993 ; and

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

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

§ 2º The figures for the reduction of the provision by the application of the limit referred to in this article or by the deduction referred to in art. 6º will have their payment posterated, on them focusing on the financial burden of the refinancing contracts, for the time when the debt service pledging value lower than the limit.

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

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

§ 5º In the case provided for in § 4º, the benefits may not be lower than the value of the last instalment of the refinancing.

Art. 6º The amount effectively disbursed by Municipality in respect of the service of the debts mentioned in the incisos I, II, III 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, understand?if as RLR the revenue carried out in the twelve months prior to the month immediately preceding that in which it is being ascertained, observed the following:

I? proceeds from credit operations, cancellation of remnants to be paid, of disposal of goods, of transfers linked to any title, of voluntary transfers or donations received with the specific end of meeting the capital expenditure ; and

II? will be computed the proceeds from the product of the tax collection on Operations Relative to the Circulation of Goods and on Interstate and Intermunicipal Transport and Communication Services Prestations intended for the grant 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 that result in reduction or elimination, direct or indirect, of the respective burden.

Single Paragraph. The financial surplus of municipalities and foundations, excluded from the previdual character will be considered as revenue realized for the purposes of calculating RLR.

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

I? can only issue new securities of domestic or external municipal public debt, after the integral settlement of the debt subject of the refinancing provided for in this Provisional Measure ; and

II? can only contract new debt, including Anticipation of Budgetary Revenue, if the total financial debt of the Municipality is lower than its annual RLR.

Single Paragraph. Delete?whether or not of the gaskets to which the inciso II refers:

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

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

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

I? have not appropriate their expenses with personnel to the limits set out in the legislation in force ;

II? have not deployed pension contribution to active and inactive servers, with an average aliquot of at least eleven per cent of the total remuneration ; and

III? have not limited their expenses with retirees and pensioners, in the form of the legislation in force.

Art. 10. Only by law may further compositions or extensions of the debts refunded on the basis of this Provisional Measure, or, further, change to any title of the conditions of the refunding established.

Art. 11. The Union shall take over 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. Is it open to the Curator Board of the Service Time Guarantee Fund? FGTS, in the assumption of assumption by the Union of obligations relating to FGTS re-passes, pursuant to this Provisional Measure, to authorize financial agents to promote the return of the rested resources, under the originally established conditions, provided that are constituted sufficient guarantees.

Art. 16. Are the acts practiced on the basis of the Provisional Measure No. 2,118 to be convalidated?32, of June 21, 2001.

Art. 17. This Provisional Measure comes into force on the date of its publication.

Art. 18. Revoke?if the Provisional Measier No. 2,118?32, of June 21, 2001.

Brasilia, June 28, 2001 ; 180º of Independence and 113º of the Republic.

FERNANDO HENRIQUE CARDOSO

Pedro Parente