States Give Credit to Suppliers – Economics



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Spacecom's electronic ankle and prison monitoring company is no longer just a service provider and has become a source of state funding: Minas Gerais, Goiás, Maranhão and Tocantins, as well as 8 million have had outstanding invoices since 2015. "It's a tax that pedals what they (the states) do.They go through financial problems and try to push the account to the provider for it to finance itself. same, "says Savio Bloomfield, owner of Spacecom.

In a document released in November, the Treasury also indicates that Brazilian states have taken advantage of service providers and, "in extreme cases," even servers to finance. The "credit transaction" is done when governments incur expenses, but do not delete them, leaving leftovers to pay year after year.

The Financial Bulletin of sub-national entities, prepared by the Treasury, also shows that the remnants of all states increased by 75% last year and reached 29.7 billion rubles. "You can see a tendency for the growth of the amounts registered (remaining to pay) in most states, which can be seen as a way to finance the states with their suppliers," says the document.

With 150 employees and a turnover of R $ 74 million this year, Spacecom settles its accounts in these debtor states with the income it earns in the other 12 states where it also has a presence. According to Bloomfield, in Tocantins, the company suspended its services. In Goiás, the government questioned the quality of service provided by a contract valid until last June, but signed another contract with the company in August, according to Bloomfield. "All these states have made maneuvers not to pay," he says.

The State found that in Goiás, the government of José Eliton (PSDB) had concentrated in recent weeks on the repayment of debts incurred in the last two quarters. In this way, he is able to comply with the Financial Accountability Act (LRF), which states that during the last eight months of his term, the governor may not incur obligations without the necessary liquidity to delete them. However, this strategy by the Goiás government could prevent Spacecom from receiving around 2 million rand from the first contract signed in April 2017.

Goiás' finance secretary sought to have worked to achieve "the best possible financial result in the end of the year "and that the final figures for the year, which will indicate the existence or not of any outstanding payments in 2018, have not yet been consolidated.

The Treasury Secretaries of Minas Gerais and Tocantins did not return the requests for interviews. The report was unable to contact the Tocantins Secretariat for Justice and Citizenship. The Prison Administration Department of Maranhão, responsible for the Bloomfield payment, said that the amount charged by Spacecom was higher than the market price and that the contract was therefore disputed.

Trend. According to economist Pedro Schneider of Itaú, despite the restrictions imposed by the LRF during the last year of mandate, the tendency is that states continue to leave left to pay, their main problem today being the high expense in staff. . "Given the situation in Rio, for example, it is certain that the state will leave some remains this year."

Schneider points out that, although the remainders are paid throughout the country, most of them they are concentrated in already fragile states – 42% of total debt in 2017 comes from Rio and Minas Gerais. In these two states, personnel costs account for 70.8% and 79.18% of current net income, respectively. The limit set by the LRF is 60%. Going forward at this level makes the provider's payment space narrower.

Economist Fabio Klein of Tendências Consultoria states that the fact that the leftovers to pay are not accounted for in the main result of the states creates a false impression that there is no problem tax. In the methodology of the main result adopted by the National Treasury, only expenditure already paid is considered.

To better reflect the reality, Tendências has started to use a different methodology, which takes into account the expenses incurred (amounts reserved for a planned payment and which may give rise to outstanding payments). "The commitment can even be canceled, but, roughly speaking, it's a service that will be executed and that will have to be paid at some point," says Klein

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