28 de octubre de 2015 / 0:55 / en 2 años

RPT-UPDATE 1-Brazil, BNDES in talks to abate hefty debts -sources

(Repeats Tuesday evening story for additional subscribers)

By Alonso Soto

BRASILIA, Oct 27 (Reuters) - Brazil’s National Treasury and state development bank BNDES are in talks to abate multimullion dollar debts that are eroding government fiscal accounts, two sources with knowledge of the matter said on Tuesday.

In the last couple of years, President Dilma Rousseff has delayed payments worth around 26.5 billion reais ($6.8 billion) to the BNDES related to massive disbursements of subsidized loans to local companies to boost capital spending.

That debt, as well as others the government holds with state banks that financed the payment of social programs while revenues plummeted, is at the heart of a case against Rousseff that could lead to her impeachment. The total debt of the so-called accounting tricks amounts to between 35 billion reais and 40 billion reais, analysts say.

Under terms of the cross-debt deal, BNDES could opt for the early repayment of 26.5 billion reais in long-term debt owed to the Treasury and, in exchange, the government could use that money to honor the arrears, the two sources said.

“There is this proposal to resolve the account discrepancies between the BNDES and Treasury,” said the first source, who requested anonymity because the negotiations are underway. “This is an operation that would not affect the bank’s cash flow nor the country’s gross debt, but would have an impact on net debt.”

The official said the operation would erase the fiscal “skeletons that remain in the closet” and help rebuild the credibility of the government fiscal management after a series of accounting maneuvers criticized by the market.

The BNDES declined to comment. The finance ministry did not reply to an email seeking comments.

The government earlier on Tuesday announced a projected primary budget deficit of 51.8 billion reais for this year as a deepening political and economic crisis drags down federal revenues. The administration, however, acknowledged the deficit could be bigger if it decides to pay the debt it owes to state-controlled banks before year-end.

The repeated payment delays under Rousseff become known as fiscal “backpedaling.”

The Federal Accounts Court, known as the TCU, on Oct. 7 ruled that Rousseff manipulated its accounts in 2014 by delaying payments to lenders to disguise a widening fiscal deficit.

Opposition lawmakers are using the ruling to argue for impeachment proceedings against the unpopular leftist leader in an increasingly hostile Congress.

The TCU still has to decide if the government should repay the debts immediately or in installments. (Reporting by Alonso Soto; Editing by Guillermo Parra-Bernal, Dan Grebler and Lisa Shumaker)

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