PROVISIONAL MEASURE NO 1.969-14, March 2, 2000.

establishes criteria for the consolidation, assumption and refinancing, by the Union, of the public and other specific public debt, 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 March 31, 2000, to take on the following obligations of responsibility of Municipalities:

I-debt together with domestic or foreign financial institutions, whose contracts have been signed up to January 31, 1999, including the resulting transformation of debt-in-debt-in-debt anticipation operations founded ;

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

III-internal furnished debt constituted until December 12, 1995 or which, constituted after that date, consubstantiates simple rollover of prior furnished debt ;

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

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

VI-debt relating to credit operations concluded with institutions, financial services in the quality of financial agent of the Union, States or funds and government programmes, 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 shall not be covered by the assumption referred to in this article nor by the refinancing to which the following article refers:

I-the debts renegotiated on the basis of the Laws 7,976, December 27, 1989, and 8,727, of November 5, 1993 ;

II-debts relating to the external debt subject of renegotiation under the Brazilian Foreign Debt Financing Plan (BIB, BEA, DMLP and Paris Club) ;

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 ;

IV-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 other form of chargeability that occurred between January 31, 1999 and the date of signature of the contract for refinancing ; and

V-foreign debts together with multilateral international bodies or government foreign credit agencies.

§ 4º 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.

§ 5º 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 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 based on the PriceTable, winning the first in up to thirty days after signing the contract and the following in equal days of the months subsequent ;

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 on the basis of 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 ;

IV-proper 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-limit of commitment of thirteen per cent of Real Net Revenue-RLR, for the purpose of servicing the corresponding bonds 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 Liquidation and Custody Special System (SELIC), released by the Central Bank of Brazil, increased by one percent a year, raising by four percentage points the commitment limit set in the previous inciso ;

VII-in the event of impunctuality in the payment, without prejudice to the application of the provisions in the previous inciso, the value of the benefit will be updated by the adjusted average rate of the daily funding ascertained in SELIC, released by the Bank Central Brazil, and increased interest of late one per cent per year, calculated proratadie; 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 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 assumed and refunded by the Union.

§ 5º The reduction referred to in the preceding paragraph shall be applied as of the date of the 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 on art. 5º, and

II-the RLR commitment limit.

§ 7º The liability debts of Municipalities with the Union, except those relating to taxes and contributions, contracted until 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 to amortizing 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 to amortizing extraordinarily worth 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 extraordinary amortization:

I-the debtor balance will be recalculated, from the date of the signing of the contract, by changing the interest rate to:

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

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

c) seven and a half percent, if the Municipality has committed in the form of the inciso II of the preceding paragraph and the amortization has reached ten per cent of the updated debtor balance ;

II-the value corresponding to five times the share of outstanding unrealized amortization, duly updated in the form of the earlier incision, will be trims from the debtor balance of the principal debt and refunded by the average cost of caption of the Federal Government's furnished debt, in place of the contractual financial burden, does not apply to the value trimmed the expenditure limit set in the art's inciso V. 2º.

Art. 4º The public securities issued for payment of judicial precatories that do not meet the condition imposed by § 1º of the art. 12 of Resolution 78, 1º July 1998, of the Federal Senate, and which are not subject to the fence contained in § 3º of the same article, may be the subject of the assumption and refinancing to which the above articles refer, in this regard, 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 these securities, calculated by Table Price, for the period of one hundred and twenty months.

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 of 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 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, the formalization of which occurred until January 31, 1999 ;

V-commission of the agent, incident on 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 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 the following article shall have their payment posterated, on them incidental financial burdens of the refinancing contracts, for the time when the debt service commits value lower than 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 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 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, III and IV of the art. 1º, won between January 31, 1999 and the subscription date of the refinancing contract, may be deducted from the benefits calculated good base in Table Price, limited the monthly deduction at fifty per cent of the value of the first provison.

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 preceding that in which it is being ascertained, observed the following:

I-will be excluded from revenue 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 end specific to servicing capital expenditure ; and

II-will be computed the proceeds from the proceeds from the tax collection on Operations Relative to the Circulation of Goods and on Interstate and Intermunicipal Transport and Communication Services Prestations to 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 which results in reduction or elimination, direct or indirect, of the respective burden.

Single Paragraph. The financial surplus of the municipalities and foundations, excluded those of previdential character, will be considered as 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 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 Budget Anticipation, 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 the modernization and the apparel of the administrative machinery of Municipalities ;

II-external loans or financing from multilateral financial bodies and to institutions of foster and cooperation linked to foreign governments, provided that they contract within a given year counted June 30 of 1999 and intended exclusively for the supplementation of ongoing programs, which have positive evaluation of the financier agency.

Art. 9º The RLR's commitment limit that it 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 adequate their personnel expenses 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 arising from loan contracts with international financial bodies.

Art. 15. It is made available to the Curator Council 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 the return of the real resources, under the originally established conditions, provided that sufficient guarantees are constituted.

Art. 16. The devices forward indicated in Law No. 9,639 of May 25, 1998 ; they pass vigorously with the following essay:

?Art. 1º The States, the Federal District and the Municipalities, until December 17, 1999, will be able to opt for the amortization of their debts to the National Institute of Social Insurance-INSS, arising from social contributions as well as those arising from obligations accessories, up to the competence November 1999, upon employment of four percentage points of the Participation Fund of the States-FPE and nine percentage points of the Municipalities Participation Fund-FPM.

§ 1º The federative units mentioned in this article will be able to choose to include in this kind of amortization the debts, up to the competence November 1999, of its municipalities and the foundations by it instituted and maintained, hypothesis in that there will be the three-point addition in the FPE percentage and three points in the percentage of the FPM referred to in the caput.

§ 2º Mediating the employment of a further four percentage points of the respective Participation Fund, the federal units referred to in this article may choose to include, in this kind of amortization, the debts constituted up to the competence November 1999 to with INSS, its public companies and mixed economy societies, while maintaining the criteria for updating and incidence of legal additions applicable to companies of this nature.

§ 3º The inclusion of debts of mixed economy corporations in amortization provided for in this article will depend on state, district or municipal authorisation law.

§ 4º The term of amortization may not be less than ninety and six months and not more than two hundred and forty months, not applying, for the purposes of appropriateness of these limits, the percentage predicted in the caput of this article and the reduction established by art. 3º.

§ 5º Consolidated debt in the form of this article shall subject, as of the date of consolidation, to interest corresponding to the monthly variation in the Long-term Interest Rate-TJLP, vetoed the imposition of any other addition.? (NR)

?Art. 2º .....................................................................................................................................

Single Paragraph. The bias concluded in the form of this article will contain clause in which the State, the Federal District or the Municipality authorize the retention of the FPE or the FPM and the return to the INSS of the value corresponding to each monthly provision, on the occasion of the math of this.? (NR)

?Art. 5º The agreement concluded on the basis of the arts. 1º and 3º shall contain clause in which the State, the Federal District or the Municipality authorize the retention of the FPE and the FPM and the return to the previdual municipality of the value corresponding to the current previdual obligations of the month prior to that of receipt of the respective Participation Fund.

§ 1º At the installments of the current previdual obligations quiesced in the form of the caput of this article, the provisions of the arts do not apply. 30, inciso I, point?b?, and 34 of Law No. 8,212 of July 24, 1991.

§ 2º Constant, still, in the agreement mentioned in this article, clause in which the State, the Federal District or the Municipality authorize the retention by the financial institutions of other state, district or municipal revenues in them deposited and the return to the INSS of the remainder of the ascertained previdual debt, in the hypothesis where the resources arising from the FPE and FPM are not sufficient for the settlement of the amortization provided for in the art. 1º and current previderal obligations.

§ 3º The monthly value of current previdual obligations, for the purpose of this article, will be ascertained on the basis of the respective FGTS and Social Security-GFIP Reception Guide or, in the case of their non-presentation in the legal term, estimated, using the average of the last twelve competencies collected prior to the month of retention, without prejudice to the collection or restitution or compensation of any differences.

§ 4º The amortization referred to in art. 1º of this Act, plus current previdual obligations, may, monthly, commit up to fifteen percentage points of Municipal Net Current Revenue.

§ 5º The values due to the INSS and not collected, each month, on the grounds of the application of the preceding paragraph shall be repaced at the end of the term of the agreement provided for in this article.

§ 6º For the purposes of this article, it is understood as Municipal Net Current Revenue and revenue calculated as per Supplementary Law No. 96 of May 31, 1999.? (NR)

Art. 17. The art. 38 of Law No. 8,212 of July 24, 1991, passes vigorously with the following essay:

?Art. 38. ...................................................................................................................................

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§ 10. The agreement concluded with the State, the Federal District or the Municipality will further contain a clause in which they authorize, when there is a lack of payment of due debits or installments of parcelial agreements, the retention of the Participation Fund of the States-FPE or the Municipalities Participation Fund-FPM and the pass to the National Social Insurance Institution-INSS of the value corresponding to the resident, on the occasion of the first transfer occurring after the communication of the municipality previdual to the Ministry of Finance.

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§ 12. The agreement provided for in this article will contain clause in which the State, the Federal District and the Municipality authorize the retention of the FPE and the FPM and the repass to the previdual municipality of the value corresponding to the current previdual obligations to the previous month upon receipt of the respective Participation Fund.

§ 13. It will further appear in the agreement mentioned in this article, clause in which the State, the Federal District or the Municipality authorize the retention by the financial institutions of other state, district or municipal revenues deposited therein and the repass to the INSS of the remainder of the established previdual debt, in the hypothesis where resources arising from the FPE and FPM are not sufficient for the discharge of the parcelial and current previdual obligations.

§ 14. The monthly value of current previdual obligations, for the purpose of this article, will be ascertained on the basis of the respective FGTS and Social Security-GFIP Reception Guide, or, in the case of their non-submission within the legal deadline, estimated, using the average of the last twelve competencies collected prior to the month of retention provided for in § 12 of this article, without prejudice to the collection or refund or compensation of any differences.? (NR)

Art. 18. Law No. 9,717 of November 27, 1998 passes vigorously with the following changes:

?Art. 1º .....................................................................................................................................

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III-the contributions of the Union, States, the Federal District and the Municipalities and the contributions of civilian and military personnel, active and inactive, and of pensioners, may only be used for payment of benefits previders of the respective schemes, ressaved the administrative expenses laid down in the art. 6º, inciso VIII, of this Act, observed the limits on spending set in general parameter ;

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Single Paragraph. In the case of Municipalities, it constitutes additional requirement for the organization and operation of the social welfare system of the public servants to have directly raised revenue, in the form established by general parameter, superior to the from constitutional transfers from the Union.? (NR)

?Art. 2º-A. It shall be suspended, until December 31, 2000, the exigability of the provisions of § 1º of the art. 2º of this Act.? (NR)

?Art. 9º ....................................................................................................................................

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III-the ascertaining of infractions, per accredited server, and the application of penalties, by organ of its own, in the cases provided for in art. 8º of this Act.

Single Paragraph. The Union, States, the Federal District and Municipalities will provide the Ministry of Social Welfare and Social Assistance, when requested, information on the social welfare and pension fund provided for in the art. 6º of this Act.? (NR)

Art. 19. Financial compensation between the Union's own social security schemes, States, the Federal District and the Municipalities, in the hypothesis of reciprocal counting of contribution times, shall comply, in what couber, to the provisions of Law No. 9,796, of May 5, 1999.

Art. 20. Law No. 9,604 of February 5, 1998, passes the following additional article:

?Art. 2º-A. The National Social Assistance Fund-FNAS will be able to transfer financial resources for the development of continued social assistance actions directly to private welfare entities, from the competence of the month of December of 1999, regardless of the conclusion of agreement, arrangement, adjustment or contract, in exceptional character, when the repass cannot be effected directly to the State, Federal District or Municipality in consequence of default of these with the Social Security System.

Single Paragraph. The Executive Power will regulate the continued actions of social assistance, of which it treats this article, within thirty days, from December 10, 1999.? (NR)

Art. 21. The acts practiced on the basis of the Provisional Measure No. 1.969-13, of February 3, 2000, shall be convalidated.

Art. 22. This Provisional Measure comes into force on the date of its publication.

Art. 23. It is revoked the caput of the art. 95 of Law No. 8,213 of July 24, 1991.

Brasilia, March 2, 2000 ; 179º of Independence and 112º of the Republic.

fernando henrique cardoso

Pedro Malan

Waldeck Ornélas