Approval Granted for Entrance into Propag by ALMG
Minas Gerais Legislative Assembly Approves Debt Payment Program Bill
After three days of review, the Minas Gerais Legislative Assembly (ALMG) approved the Basic Text of Bill PL 3.731/2025, which requires the compliance of the state with the Full Debt Payment Program (Propag) on Thursday, May 29th. This legislation binds the decision-making power of the Romeu Zema government to meet Propag's counterparties.
The Zema administration has until December 31, 2025, to submit a formal request to join the Ministry of Finance, acknowledging that a late request will be needed due to time constraints. The State Secretary of Finance, Luiz Claudio Gomes, admitted this, citing the Tiradentes Palace's intent to seek entry into the program at the conclusion of the deadline.
Modifications in PL 3.731/2025 have resulted in a decrease in the real interest rate index from 4% to 2%, provided that Union-accepted assets from the state reach 20% of the debt value, currently amounting to R$ 165 billion. If the assets only reach the 10% debt value floor, the index will drop to 3%.
Last week, the President of the Financial and Budgetary Control Commission, Zé Guilherme (PP), incorporated an amendment from State Deputy Andréia de Jesus (PT) into PL 3.731/2025. The amendment now necessitates the Zema government's choice of interest rate to be supported by a "technical study demonstrating the economic viability of the alternative."
In presenting the terms for joining Propag, Vice-Governor Mateus Simões (New) expressed that the state would only participate in the program if it could reduce 20% of its debt with the Union. He added that without this reduction, the state would be required to pay R$ 10 billion annually to the Union, amounting to R$ 14 billion in total.
In the first round of deliberation, the Public Administration Commission excluded the Zema government's discretion in determining the investment of surplus interest rate funds. This change remains in effect, as proposed by relator Charles Santos (Republicans) and supported by Deputy Sargento Rodrigues (PL).
Upon the initial approval of the basic text, leader João Magalhães (MDB) downplayed any potential setbacks for the Tiradentes Palace. He emphasized that the government would adhere to the law, regardless of Propag participation.
The final version of PL 3.731/2025 also includes an amendment by Deputy Lucas Lasmar (Rede), which foresees the creation of an Interinstitutional Committee for Monitoring the Execution of the Adhesion Contract to Propag. This committee, made up of representatives from the Powers and autonomous bodies, will oversee the implementation of the adhesion agreement.
Debt payment programs, such as Propag, usually obligate participating states to implement fiscal adjustment measures, honest debt repayment schedules, and comply with federal oversight or transparency standards. Entrance into these programs aims to restore fiscal balance, improve creditworthiness, and provide access to federal financial support. However, they often entail limitations on state budget flexibility and mandatory fiscal discipline.
The Minas Gerais Legislative Assembly's approval of Bill PL 3.731/2025 affects both the business sector and politics, as it binds the Zema administration to meet the Full Debt Payment Program's (Propag) counterparties. The decision also impacts general-news, as it reveals the state's intent to seek entry into Propag, which could influence the state's financial status in the near future.
