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BRASILIA Dec 21 The Brazilian government will
continue to impose conditions on cash-strapped states in
exchange for federal support, Finance Minister Henrique
Meirelles said on Wednesday, after lawmakers watered down a
Meirelles said President Michel Temer could veto a bill
approved in Congress' lower house on Tuesday, which allows
states in the worst financial condition to halt debt payments
and rework commitments with the federal government..
The legislation also reduces debt payments and extends the
maturity on 427 billion reais ($127 billion) of debt owed by all
of the 27 states.
Lawmakers removed government-proposed measures to force
states to increase pension charges on employees and forbid local
governments from raising wages and creating new jobs.
The bill, already passed by the Senate, was sent to Temer
for his signature.
Even if it is signed into law, the government would
negotiate with each state on conditions for receiving debt
relief, Meirelles told journalists.
"States will have to meet all the austerity conditions,"
Meirelles said, adding that he expects the state of Rio de
Janeiro to apply for the program.
Meirelles added that a pension reform proposal is the
priority of the Brazilian government, but authorities will
continue to unveil microeconomic measures.
Tuesday's lower house vote put into question Temer's
political support in Congress to approve unpopular reforms to
shore up the country's finances and rescue the economy from a
recession that threatens to stretch into a third year.
Temer, weakened politically by a government corruption
scandal, this week agreed to release more than 10 billion reais
($3 billion) from an amnesty asset program to states and
municipalities even after they scrapped his plan to impose wage
freezes in exchange for the money. The move came after states
filed a lawsuit to force the government to share the money.
($1 =3.33 reais)
(Reporting by Alonso Soto; Writing by Silvio Cascione; Editing
by Chizu Nomiyama and W Simon)