(Bloomberg) -- Brazil could override fiscal deficit limits and issue emergency credit to battle destructive wildfires, according to a senior finance ministry official.
The fiscal rule allows the government to exceed the spending limit in the event of natural disasters caused by a climate emergency, Economic Policy Secretary at Finance Ministry, Guilherme Mello, told journalists on Friday.
The nation is currently being hit by its worst drought in four decades which is putting crops and energy supply at risk as fires spread. Mello said the decision hasn’t been made yet, but that the country adopted a similar measure earlier this year when the Southern state of Rio Grande do Sul was hit by record floods.
In that case, the actions taken by the federal government were very effective at helping the state’s economy and jobs market to recover, he said.
The government is mulling new emergency aid for fishermen in the country’s north due to the severe drought, Social Development Minister Wellington Dias said Thursday in an interview with GloboNews. The Brazilian government will also offer a renewable credit line for producers affected by fires caused by extreme weather, according to Agriculture Minister Carlos Favaro, newspaper Folha de S.Paulo reported.
If excluded from the spending cap, such measures could potentially increase investors’ concern over Brazil’s ability to rein in its fiscal deficit.
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