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Provisional Measure No. 2,118-26 Of 27 December 2000

Original Language Title: Medida Provisória nº 2.118-26, de 27 de Dezembro de 2000

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PROVISIONAL MEASURE # 2.118-26, OF December 27, 2000

establishes criteria for the consolidation, assumption and refinancing, by the Union, of the public furnishing debt and another that 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 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 financial institutions 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 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-term: by up to one hundred and eighty months, with monthly and consecutive instalments, winning the first on the date of signing of the refinancing contract and, the other ones, on the dates of maturities 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 internal furnished debt (SELIC fee), plus, in the event of default, of a per cent moratorial interest on the year, on the debtor balance previously updated ;

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

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

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

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

II-debts relating to the external debt subject of renegotiation within the framework of the Brazilian Foreign Debt Financing Plan (BIB, BEA, DMLP and Club 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 government foreign credit 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 over by the Union will be refunded to the Municipalities, observing the following:

I-term: up to three hundred and sixty monthly and successive instalments, calculated based on Table Price, winning the first in up to thirty days after signing 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 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 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 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 percent of the updated debtor balance of the debt assumed and ripened 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 carried out in full the extraordinary amortization, the debtor balance will be recalculated, from the date of 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 the extraordinary amortization has reached ten percent 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 preceding paragraph and the extraordinary amortization has reached ten percent of the updated debtor balance.

Art. 4º The 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 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 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, whose formalization has 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 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 preceding that in which it is being ascertained, observed the following:

I-will be excluded from revenues from credit operations, cancellation of remains to be paid, and disposal of goods, from transfers linked to any title, from 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 contraction 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 to the National Bank of Economic and Social-BNDES Development, provided that contractors within a given year of June 30, 1999 and intended exclusively for the supplementation of ongoing programs.

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, yet, change to any title of the conditions of the refunding laid down.

Art. 11. The Union shall assume the obligations arising from this Interim Measure upon issuance of National Treasury securities, with characteristic 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 international finance.

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 relating to FGTS repasses, 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. 16º Stay convalidated the acts practiced on the basis of the Provisional Measure No. 2.043-25 of November 21, 2000.

Art. 17º This Provisional Measure shall come into force on the date of its publication.

Art. 18º Revoga-if the Provisional Measure No. 2.043-25, December 21, 2000.

Brasilia, December 27, 2000 ; 179º of Independence and 112º of the Republic

Fernando Henrique Cardoso

Pedro Malan