Minas Gerais Fiscal Indicators Improve Under Zema but Cash Deficit Persists

Minas Gerais has seen an improvement in several fiscal indicators under Governor Romeu Zema, although the state ended 2025 with a negative net cash balance of R$ 11.3 billion. The state transitioned from a budget deficit of R$ 12 billion in 2019 to a budget surplus of R$ 1.1 billion last year, with a projection of R$ 7.4 billion for 2026. Despite these gains, specialists cited in the reports argue that these results do not represent a structural change in expenditure management because no structural reforms were implemented.

Financial relief was aided by Supreme Court decisions that suspended R$ 34.3 billion in debt payments to the Union for 21 months between December 2022 and early 2026. Additionally, the state joined the Propag renegotiation program for R$ 179.3 billion in debts, which includes an extraordinary amortization of R$ 35.8 billion through financial assets. This move is expected to save the government R$ 5 billion this year alone.

Simultaneously, tax waivers increased from R$ 15 billion in 2021 to R$ 24.2 billion by the end of last year. Analysts suggest these incentives reduced potential revenue that could have further improved the cash position. Zema, who is running for President, has not implemented the administrative reforms he advocates for at the federal level within his own state.

The state Finance Department stated that the indicators show progress in organizing public accounts and a recovery of investment capacity. This follows a severe cash crisis inherited from the administration of Fernando Pimentel and previous governments, which left a total cash hole of R$ 46.9 billion in 2019, including unpaid salaries and overdue transfers to municipalities.