Brazil's federal government has told the Supreme Federal Court (STF) that paying court-ordered debts known as precatórios without case-by-case technical audits could reach R$ 255.3 billion in 2026, and asked the court to suspend indemnity lawsuits over prices in the sugar and ethanol sector. The filing by the Advocacia-Geral da União (AGU), the government's legal office, was submitted in Brasilia and reported by G1 on Thursday (Oct. 8). It also asks that payments, withdrawals and transfers of amounts tied to precatórios already issued in these cases be frozen.
Precatórios are payment orders that force the government to settle debts once a lawsuit has ended with no further appeal possible. At the center of the dispute are compensation claims filed by sugar and ethanol mills over losses they attribute to the price-fixing policy of the former Sugar and Alcohol Institute (IAA), a state agency that regulated the sector in the 1980s and 1990s.
The AGU's argument
The AGU argues that the understanding the STF has already set for the liquidation and execution phases, under which "proof of the actual economic loss, through a technical expert review in each concrete case" is indispensable to establish the federal government's civil liability, must also be extended to the indemnity lawsuits themselves. In the agency's view, the court's full bench should standardize the thesis, and until that happens all sugar and ethanol sector cases in which the controversy remains open should be suspended.
According to the calculation sent to the court, continuing the executions and allowing precatórios to be issued and paid without individual technical review could generate an impact of R$ 255,310,838,187.56 on federal coffers in 2026. The survey covered only sugar and ethanol sector cases already in the liquidation, execution or execution-challenge phases, leaving out lawsuits still in earlier stages.
Gilmar Mendes, Fux and the Banco Master trail
The request was filed in a case whose rapporteur is Justice Gilmar Mendes, who has already sent the debate over the need for expert audits to the full bench. Justice Luiz Fux asked for more time to analyze the referral of that decision in a trial before the court's Second Panel. Mendes has said that "mills won convictions against the federal government over prices fixed by the former Sugar and Alcohol Institute in the 1980s and 1990s based on generic studies, without the individual expert review required by the STF's understanding".
Precatórios from the sugar and ethanol sector have drawn renewed scrutiny from the government and the judiciary since suspicions emerged that these credits were used in schemes involving Banco Master, the bank at the center of a billion-real fraud investigation in Brazil. One hypothesis under investigation is that the bank bought judicial credits against the government at steep discounts, booked the assets at far higher values and used them as collateral to raise funds in the market. With the AGU's request, the final word on suspending the payments now rests with the STF's full bench, which must decide whether each mill will have to prove, case by case, the loss it claims to have suffered.