Brazil used Merchant Marine funds to pay debt, reveals CNT study

Around BRL 17.44 billion from the AFRMM, an additional freight tax levied on maritime cargo operations to upkeep the national fleet, was collected over the past two years and used to settle the debt the Brazilian federal government owed. The information is from a study by the National Transport Confederation (CNT) reported in advance to Valor, which assessed that the country needs BRL 223 billion for waterway infrastructure investments. Changing the purpose of AFRMM funds compromises the modernization and renewal of the Brazilian merchant fleet.

The allocation of AFRMM resources has constitutional support on Brazil’s Constitutional Amendment 109/2021, which authorized using public funds whose operations were in surplus to amortize public debt in the years 2021 and 2022.

The study found that “FMM [Merchant Marine Fund] resources were applied to pay securities debt and not to finance projects in the Brazilian shipbuilding industry.”

Although this legislative breach should no longer be valid this year, the pressure for using FMM funds for other purposes shall continue, as Amendment 127, approved at the end of last year, gave leeway to the use of financial surpluses to pay the federal minimum wages for nurses from 2023 to 2027. CNT thinks that the measure may compromise the allocation of funds for the Merchant Navy.

One complicating point is that the Merchant Marine Fund’s resources will likely drop this year as AFRMM rates have decreased by 25% to 8% in long-distance navigation and from 10% to 8% in cabotage navigation. Notwithstanding, Brazil authorized using the FMM to fund infrastructure works in ports and waterways.

According to a CNT study, the fund’s use reached BRL 10.64 billion in 2021 and BRL 14.43 billion in 2022. However, most of its allocation was for the payment of the Union’s debt and not for the concession of loans and financing.

Source: Valor Econômico

To read the full original article, please see: https://valor.globo.com/brasil/noticia/2023/03/30/governo-usou-recursos-da-marinha-mercante-para-pagar-divida-diz-cnt.ghtml

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