The Union paid R$834.8 million in late debts from states and municipalities in May this year, according to the Report on Guarantees Honored by the Union in Credit Operations and Recovery of Counter-Guarantees, released this Monday (15) by the National Treasury. In 2026, the value will already reach R$2.2 billion in debts owed by federated entities honored by the Union. The states that required coverage from the National Treasury last month were: Related news: The Union pays R$10.95 billion in state debts. Treasury pays R$257.7 million in state and municipal debts in January. National Treasury launches title with investment starting at R$1. - Rio de Janeiro: R$619.61 million; - Rio Grande do Sul: R$ 212.36 million; and - Rio Grande do Norte: R$ 2.66 million. In relation to municipalities, the debt paid by the Union was the city halls of Paranã (TO), with R$ 99.88 thousand, and Santanópolis (BA), with R$ 67.91 thousand. Since 2016, the Union has paid R$88.73 billion in guaranteed debts. In addition to the monthly report, the National Treasury makes data available in the Honored Guarantees Panel. The guarantees represent the assets offered by the Union – represented by the National Treasury – to cover possible defaults on loans and financing by states, municipalities and other entities with national banks or foreign institutions, such as the World Bank and the Inter-American Development Bank (IDB). As guarantor of the operations, the Union is notified by creditors that a certain portion of the contract has not been paid. >> Follow the Agência Brasil channel on WhatsApp Collateral recovery If the entity does not fulfill its obligations within the stipulated period, the Treasury compensates for defaults, but deducts the amount covered by ordinary federal transfers – such as revenues from participation and tax sharing funds, in addition to preventing new financing. Interest, late payments and other charges stipulated in the loan contracts also apply to outstanding obligations, also paid by the Union. There are cases, however, of blocking the execution of counter-guarantees due to the adoption of tax recovery regimes, through court decisions that suspended execution or through debt compensation legislation. Of the R$88.73 billion honored by the Union, around R$80.96 billion falls into these situations. Since 2016, the Union has recovered R$6.04 billion in counter-guarantees. The largest amounts refer to debts paid by the states of Rio de Janeiro (R$2.77 billion) and Minas Gerais (R$1.45 billion), in addition to other states and municipalities. Some of these counter-guarantees, however, were returned to the aforementioned entities by virtue of a court decision. In 2026, the Treasury has already recovered R$118.04 million in counter-guarantees. Propaganda Until the end of last year, states were able to join the State Debt Payment Program (Propag), which provides for a series of conditions, such as the sale of assets to the Union and a spending cut plan to release up to R$20 billion in investments by the states. Propag provides for discounts on interest and payment of the balance of state debts in up to 30 years. In return, the states that join will contribute resources to the Federal Equalization Fund (FEF), which will distribute money to all states that join, even those that do not have debts with the Union, for investments in education, public security, sanitation, housing, transport and other areas. After Congress overturned the vetoes on Propag, at the end of November, 22 states joined the program. Of the Federation units, only the Federal District, Mato Grosso, Pará, Paraná and Santa Catarina did not join the special renegotiation. Rio Grande do Sul Due to the floods in Rio Grande do Sul, in 2024, the Union suspended payment of the state's debt for 36 months. In addition, the interest that corrects the debt annually, around 4% per year plus inflation, will be forgiven for the same period. The state's debt with the Union is currently around R$100 billion and the installments that should be paid will be transferred to a state fund intended for investments in the reconstruction of the state due to the public calamity. In June 2022, Rio Grande do Sul had reached an agreement with the Union and had its fiscal recovery plan approved. The plan allows the state to repay, in a phased manner, the Union's debt, the payment of which had been suspended by an injunction from the Federal Supreme Court since July 2017. In exchange, the government of Rio Grande do Sul must execute a fiscal adjustment program that provides for privatizations and reforms to reduce local spending.