Post Office: decree allows Union guarantee for loan

President Luiz Inácio Lula da Silva (PT) published on Tuesday (9) the decree that paves the way for the provision of a Union guarantee on a R$ 20 billion loan to assist the Post Office. The measure was anticipated by Folha. The goal is to provide legal support for the sovereign guarantee, which in turn is a necessary condition to enable such a large operation for a state-owned company in difficulties. The financial conditions of the loan are still being negotiated with the banks. An initial proposal presented by Banco do Brasil, BTG Pactual, Citibank, ABC Brasil, and Safra was approved by the Post Office’s board of directors, but the guarantee was denied by the Treasury, which considered the interest rate too high for this type of operation. The decree allows a state-owned company, when identifying the risk of dependence on the National Treasury (i.e., needing money from the Budget to cover operational expenses, including personnel) in the current year or the following three years, to present a restructuring plan. In this document, the company must list the necessary investments and adjustment measures sufficient to maintain a non-dependence situation.