PROVISIONAL MEASURE NO. 2.185?35, OF August 24, 2001

Establishes criteria for consolidation, assumption and refinancing, by the Union, of the furnishing public debt and others that specifies, of responsibility of the Municipalities.

The PRESIDENT OF THE REPUBLIC, in the use of the assignment that confers it on art. 62 of the Constitution, adopts the following Provisional Measure, with force of law:

Art.1th It shall be the Union authorized, until June 15, 2000, to assume the following obligations of responsibility of the Municipalities:

I? debt to domestic or foreign financial institutions, whose contracts have been firmed up to January 31, 1999, inclusive of that arising from transforming budget revenue anticipation operations into founded debt;

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

III? internal furnishing debt constituted until December 12, 1995 or which, constituted after that date, connates simple rolling of previous furnishing debt;

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

V? debt relative to budgeting revenue anticipation operations, contracted by January 31, 1999; and

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

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

§ 2º Powers to be still object of assumption by the Union the debts of integral entities of the indirect municipal public administration, framed in the incisos I to VI of the caput and which are previously taken up 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 due or any form of exigency that occurred between January 31, 1999 and the date of signing of the refinancing contract may be refunded by the Union, observed the conditions set out in this Interim Measure, except as to:

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 remaining 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 capping the internal furnishing debt of the Federal Government (SELIC rate), plus, in the event of inaddition, of moratoria interest of one percent a year, on the previously updated debtor balance;

III? extra? limit of the remaining debts refunded in the form of this Provisional Measure and Law No. 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 shall not be covered by the assumption referred to in this article or by the refinancing to which the art relates. 2º:

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

lI? the debts relating to the external dilife object of renegotiation under the Brazilian Plan of Foreign Debt Financing (BIB, BEA, DMLP and Club de Paris);

III? the plots of the debts referred to in the incisies 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? the external debts to multilateral international bodies or foreign credit government agencies.

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

§ 6º Might still the Union, in the 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 refinancing.

Art. 2º The debts taken by the Union will be refunded to the Municipalities, noting? if the following:

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

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

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

IV? appropriate guarantees that will necessarily include the binding of own revenues 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 percent of the Real-RLR Net Income, for the fulfillment effect of the corresponding obligations to the service of refunded debt;

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

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

VIII? pass to the Municipalities of the desks 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 depreciation of the refinancing contract.

§ 2º The elevation of the commitment limit will be applied from the subsequent installment to the unfulfillment.

§ 3º The additions to which the incisseum VII is concerned are not subject to RLR's commitment limit.

§ 4º The interest rate could be reduced to:

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

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

§ 5º The reduction referred to in § 4º will be applied to from the date of the Integralization 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 provisions of the art. 5º; and

II? the RLR's commitment limit.

§ 7º The liability debts of the Municipalities to 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 At the discretion of the Municipality, the debt could be refunded at rates lower than that provided for in the inciso II of the art. 2º, provided that extraordinary amortization is effected within thirty months of the date of signing of the respective refinancing contracts.

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

I? seven integers and five tenths per cent, if the Municipality commit? if 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 percent, if the Municipality commits? if amortizing extraordinarily value equivalent to twenty percent of the updated debtor balance of the debt assumed and refunded by the Union.

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

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

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

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

Art. 4º The public bonds issued after 12 of December 1995, for payment of judicial precatories, pursuant to art. 33 of the Act of Transitional Constitutional Provisions, they will be able to be the subject of the assumption and refinancing to which the arts are referred. 1º, 2º and 3º, noting? if, in this hypothesis, that the monthly installment of the refinancing contract will correspond, at the very least, to the provision that would be due in respect of those securities, calculated by Table Price, for the term of one hundred and twenty months.

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

Art. 5º For the purposes of application of the limit set forth in the inciso V of the art. 2º, may be deducted from the limit ascertained the expenses effectively carried out in the previous month by the Municipality, corresponding to the services of the following obligations by it titled:

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

II? external debt contracted by January 31, 1999, even that restructuring object under the Brazilian External Debt Financing Plan (BIB, BEA, DMLP and Paris Club);

III? parceling of debts firmed 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? parceled debts to the Service Time Guarantee Fund? FGTS, whose formalization has occurred until January 31, 1999;

V? agent's commission, incident on the payment of the provision arising from Law No. 8,727, of 1993; and

VI? debt relative to property credit refunded to the Amparo of Law No. 8,727, from 1993, and effectively assumed by the Municipality, deduced the revenues earned from those operations.

§ 1º Powers, still, be deduced the expenses regarding principal, interest and too much burden of the operations arising from Law No. 8,727, 1993, carried out in the month, excepted the commission of the agent.

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

§ 3º The limit of thirteen per hundred established in the art. 2º is applicable only for the refunded debts pursuant to this Interim Measment.

§ 4º The eventual debtor balance resulting from the application of the commitment limit established in the form of this article, may be refunded under the same conditions as this Provisional Measure, in 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 § 4º, the benefits may not be lower than the value of the last instalment of the refinancing.

Art. 6º The amount effectively disbursed by the Municipality concerning the service of the debts mentioned in the incisos I, II, III and IV of the art. 1º, due 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, capped the monthly deduction at fifty per cent of the value of the first instalment.

Art. 7º For the purposes of this Provisional Measure, please understand how RLR the revenue realized in the twelve months prior to the month immediately preceding the one in which it is being ascertained, noted the following:

I? shall be excluded from revenue from credit operations, cancellation of remains payable, of disposal of goods, of transfers linked to any title, of voluntary transfers or donations received with the specific purpose of servicing to capital expenditure; and

II? the proceeds from the proceeds of the Excitement Tax on Relative Operations to the Circulation of Goods and on Prestations of Interstate and Intercity and Communication Services and Communication intended for the granting of any tax or financial favors, including in the form of loans or financing, yet 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 the authorities and foundations, excluded those of the previdential character, will be considered as revenue realized for the purposes of calculating RLR.

Art. 8º The debt refinancing contract should predict that the Municipality:

I? will only be able to issue new securities of the domestic municipal or external municipal furnishable debt, after the full settlement of the debt object of the refinancing provided for in this Interim Measlary; and

II? will only be able to borrow new debt, including Budgetary Revenue Anticipation operations, if the total financial debt of the Municipality is lower than its annual RLR.

Single paragraph. Exclude? if of the sealings referred to in the inciso II:

I? the hiring of credit operations instituted by federal programs, aimed at the modernization and skeltering of the administrative machinery of the Municipalities;

II? loans or financing from multilateral financial bodies and institutions for fostering and cooperation linked to foreign governments, which have a positive assessment of the finance agency, and the National Development Bank Economic and Social? BNDES, provided that contracted within the three-year term counted from June 30, 1999 and intended solely for the supplementation of ongoing programs.

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

I? have not adequate their expenditure on personnel to the limits set out in the legislation in force;

II? have not deployed pension contribution to the active and inactive servers, with average aliquot of at least eleven percent of 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 will new compositions or extensions of debts refunded on the basis of this Provisional Measure be permitted, or, still, change to any title of the established refinancing conditions.

Art. 11. The Union shall assume the obligations arising from this Provisional Measure upon issuance of National Treasury securities, with characteristics to be defined by the Executive Power.

Art. 12. Revenue from the refunding payments granted to Municipalities, pursuant to this Interim Measure, shall be fully used for abatement of the public debt liability of the National Treasury.

Art. 13. Stands the Bank of Brazil S.A. designated financial agent of the Union for the purpose of concluding, monitoring and controlling the contracts for the assumption and refinancing of which it treats this Provisional Measure, by having the debtor the payment of the concernperson remuneration.

Art. 14. It shall be the Union authorised to carry out, through the Federal Economic Box, credit operations with the Municipalities, intended for programs for strengthening and modernizing the municipal administrative machinery, using for that purpose resources coming from loan contracts with international financial bodies.

Art. 15. Is it available to the Curator Council of the Service Time Guarantee Fund? FGTS, in the assumption of assumption by the Union of obligations concerning FGTS repasses, pursuant to this Provisional Measure, authorize the financial officers to promote the return of the past resources, under the conditions originally established, since that are constituted sufficient guarantees.

Art. 16. They are convalidated the acts practiced on the basis of the Provisional Measure No. 2.185-34, of July 27, 2001.

Art. 17. This Interim Measure takes effect on the date of its publication.

Brasilia, August 24, 2001; 180º of Independence and 113º of the Republic.

FERNANDO HENRIQUE CARDOSO

Pedro Malan