Despite the adoption of various strategies that materially increased tax revenues in recent years, particularly the value-added tax (ICMS), states are suffering from growing public employee costs, including pension payments. This has led to historically low operating margins. In 2015, operational margins for the five Fitch-rated states are expected to rise to 5.4% from the 4.7% anticipated for 2014. However, there is some room for downward revisions.
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