Brazil’s Supreme Court upholds drought- and wildfire-related spending, misses fiscal target Reuters

By Marcela Ayres

BRASILIA (Reuters) – Brazil’s Supreme Court on Sunday authorized the government to exempt spending on wildfires and drought in the Amazon (NASDAQ: ) and Pantanal regions from this year’s fiscal target, as the country grapples with the economic impact of the worst droughts on record.

Judge Flavio Dino’s decision effectively clears the way for the government to take action if it sends an executive order to Congress calling for extraordinary measures to address the situation.

According to the National Center for Monitoring and Early Warning of Natural Disasters (Cemaden), the current drought is the most intense and widespread in Brazil since records began in 1950, exacerbated by a weak rainy season in the north-central region, the increase in atmospheric temperatures. , and land use changes, with forest areas being replaced by pastures.

Record fires have ravaged the Amazon and Pantanal regions as well as other parts of the country, while severe drought has hampered navigation along the Amazon waterways, with low water levels isolating some communities and disrupting shipments of soybeans and corn from states in center-west. such as Mato Grosso, the largest grain producing area in Brazil.

Judge Dino also authorized the government to bypass a statutory waiting period for hiring temporary firefighters and ordered a federal police fund to allocate resources to prioritize wildfire investigations.

Earlier this year, the government already waived spending for the unprecedented floods that hit the southern state of Rio Grande do Sul in May, highlighting the growing burden of climate events on public finances.

Spending on Rio Grande do Sul has so far totaled 27 billion reais ($4.85 billion) and will not be counted when assessing the government’s goal of eliminating this year’s primary deficit.

While Dino’s decision allows potential spenders to bypass the spending cap set by the new fiscal rules and exempts them from calculating the fiscal target, it would still add to Brazil’s public debt, which is already considered high compared to other emerging markets .

($1 = 5.5625 reais)