IFI Says State Debt Deal Will Cost Federal Treasury R$190.7 Billion and Worsen Debt Trajectory

Overview

• The Instituição Fiscal Independente estimates the Propag program will reduce federal receipts by R$190.7 billion over 30 years under expected asset amortizations and by up to R$350.3 billion without those amortizations.
• Propag lets states refinance with real rates of 0–2%, up to 30-year maturities and the option to pay down debt by transferring assets, which eases state budgets while deferring federal cashflows.
• Because the Treasury must raise funds at market rates higher than the program’s state rates, the IFI warns the measure will raise the Union’s borrowing needs and push public debt higher.
• The IFI also flagged weakening finances at federal state-owned companies, noting Correios posted a R$8.5 billion loss in 2025, which increases the risk of future federal bailouts that would pressure public accounts.
• The report says the debt path is unfavorable without policy moves and notes external estimates that are even worse, making new fiscal measures or revenue offsets the likely next step to stabilize debt metrics.