Brazil urges additional aid after $10 Billion plan to combat floods
The Brazilian government is weighing additional measures to help combat the fallout from historic floods in the state of Rio Grande do Sul.
The Brazilian government is weighing additional measures to help combat the fallout from historic floods in the state of Rio Grande do Sul, just days after unveiling a 52 billion reais ($10 billion) aid plan.
The country is in talks with international financial institutions including the International Monetary Fund and the World Bank after rolling out initial measures that included providing subsidized credit, according to Dario Durigan, executive secretary of Finance Ministry.
“Multilateral lenders are all willing to provide funding for the reconstruction” of the southern state, Durigan said in an interview in New York Wednesday, without giving details on the discussions. Durigan added that Brazil’s government is still in the process of assessing the damage and financial needs from the affected areas. Another point being considered is whether facility or credit lines agreed with multilateral lenders would need to carry sovereign guarantees.
Durigan, a senior member of Finance Minister Fernando Haddad’s economic team, said it’s still too early to estimate the full impact of the worst flooding in the state’s history on the country’s gross domestic product. The catastrophe killed over 150 people and left half a million displaced, in addition to disrupting the estate’s power and transportation systems. The airport in the state capital city of Porto Alegre is expected to remain shut for several months.
While supporting the state and the affected population is a priority, Durigan said, the finance ministry remains committed to avoid derailing the government’s fiscal efforts. “We’re scaling the response cautiously,” he said.
Durigan, who’s meeting with investors in the US this week, declined to comment on the recent turmoil at state-controlled oil producer Petroleo Brasileiro SA and the exit of Chief Executive Officer Jean Paul Prates.
Brazil is eyeing additional sales of sustainable debt still this year after the issuance of $2 billion worth of such notes in November.
While interest among private investors and potential underwriters is high, Durigan said, the current combination of higher international borrowing costs and a strong dollar is not favorable.
“There’s a constraint right now due to high US rates — we recognize that,” he said.
