Among the significant changes in the framework of registered warrants (precatórios) promoted by Constitutional Amendment No. 99, of December 14, 2017, the fourth paragraph of article 101 of the Transitory Constitutional Provisions Act (ADCT) stands out, which gives the Federal Government the duty to make available to the states, the Federal District, and municipalities, as well as to their instrumentalities, foundations, and state-owned companies a special credit line for payment of registered warrants submitted to the new special payment system, that is, registered warrants due on March 25, 2015, and those that expire by December 31, 2024, the deadline to settle all these registered warrants.

According to the provision, the Federal Government should have the credit line available within six months of the entry into force of the new special payment system, that is, by June of 2018. However, the Minister of Planning, Development, and Management, Esteves Colnago, has already said that the Federal Government has no budgetary forecast to provide credit lines to the states, Federal District, and municipalities in order to subsidize the payment of registered warrants of these states and that it is not yet possible to know whether it will be able to meet the standard and if so, how.

The National Treasury Secretary, Mansueto Almeida, announced that, in the opinion of the Federal Government, the regulations implementing Constitutional Amendment No. 99/17 could be provided, but not the actual availability of the credit line to other federal entities within the period originally provided. This is because, according to the National Treasury, the possibility of granting a subsidy from the federal public coffers for this purpose before the 2020 fiscal year is not envisaged. Therefore, the other federal entities should seek their own funds to pay registered warrants.

The Federal Government had announced that it would conclude the preparation of the draft regulations of Constitutional Amendment No. 99/17 in order to submit it to the National Congress by June 30, 2018. However, so far, there is no news that this has happened.

Faced with the Federal Government's failure to comply with the constitutional norm, the state government of Minas Gerais submitted Bill No. 5,011/18 to the Legislative Assembly. The text proposes that the Executive Power be authorized to obtain credit from a federal official financial institution in the amount of up to R$ 2 billion for the state of Minas Gerais to apply such funds to the payment of registered warrants submitted to the new special framework.

Bill No. 5,011/18 was received by the plenary session of the Legislative Assembly of Minas Gerais on May 13, 2018. After receiving a favorable opinion from the rapporteur of the Commission on Constitution and Justice, Congressman Leonídio Bouças, on July 11, 2018, the bill is awaiting a vote in the first round in the plenary session.

In turn, the state government of São Paulo submitted Bill No. 801/17 to the Legislative Assembly, requesting an urgent procedure, proposing terms and conditions for offsetting registered warrants with state tax debts.

To that end, Bill No. 801/17 proposes that the offset should occur between (i) a debt claim that is for a certain, liquid, and enforceable amount against the state of São Paulo, its instrumentalities and foundations, provided that there is no challenge, appeal, or defense in relation to the amount of the debt claim; and (ii) debit of a tax nature or of any nature in which the state of São Paulo, its instrumentalities or foundations appear as creditor, registered as overdue debt by March 25, 2015, and that has not been subject to an agreement to installments that is in force.

Bill No. 801/17 was assigned to Congressman Marcos Zerbini, of the Commission of Constitution and Justice, as rapporteur, and has been on the agenda of the Legislative Assembly of São Paulo since October 10, 2017.

The state of Bahia also enacted State Law No. 13,930/18, authorizing the Executive Branch to contract for financing in the amount of up to R$ 1 billion for the payment of registered warrants subject to the new special framework with the financial institution that presents the best proposal to the Treasury of the State of Bahia.

In addition, Proposed Constitutional Amendment No. 100/11 (PEC No. 100/11), which allows the use of registered warrants in the payment of housing financing, regulates the assignment, in whole or in part, of payment of debt claims in registered warrants to third parties, including for the payment of housing financing to official financial institutions, provided that the holder of the registered warrant debt claim is not the owner of another residential property.

If approved, these bills and laws may serve as an incentive for other federal entities to adopt similar initiatives aimed at raising funds for the payment of registered warrants or reducing the volume of existing registered warrants and debt claims that will potentially be converted into registered warrants in the future. These initiatives are important, especially considering that all registered warrants submitted to the new special framework should be discharged by 2024 and that the Federal Government has no budgetary forecast to release the credit line provided for the payment of registered warrants to other federal entities in 2018 and 2019.

It is worth noting that under the terms of Constitutional Amendment No. 99/17, there is an express provision that, in relation to the contracting of loans to obtain funds to be used for the payment of registered warrants, "the indebtedness limits dealt with in items VI and VII of the head paragraph of article 52 of the Federal Constitution and any other limits of indebtedness provided for by law,” that is, such financing is not subject to the limits set forth in the Fiscal Responsibility Law and any other limits, in addition to being able to rely on real guarantees from public revenues.