BRASILIA, Sept 15 (Askume) – Brazil’s Supreme Court on Sunday authorized the government to exclude spending on wildfires and drought in the Amazon and Pantanal regions from this year’s fiscal targets, as the country faces its worst drought on record with huge economic impacts.
Judge Flavio Dino’s ruling clears the way for the government to take action if it submits an executive order to Congress requiring extraordinary measures to deal with the situation.
According to the National Center for Monitoring and Early Warning of Natural Disasters (CEMADEN), Brazil is currently experiencing its most severe and widespread drought since the 1950s, due to a weak rainy season in the central and northern regions, rising atmospheric temperatures and climate change. Crucially, forest areas have been replaced by pastures.
Wildfires are raging in the Amazon and Pantanal regions and other parts of the country, while a severe drought has disrupted navigation in Amazon waterways , isolated some communities due to low water levels, and disrupted shipments of soybeans and corn to the Midwest and states such as Mato Grosso, Brazil’s largest grain-producing region, have been disrupted.
Judge Dino authorized the government to bypass legal waiting periods for hiring temporary firefighters and ordered the federal police to allocate resources to prioritize wildfire investigations.
Earlier this year, the government waived payments triggered by unprecedented floods in May in the southern state of Rio Grande do Sul, underscoring the growing burden on public finances from climate-related events.
Rio Grande do Sul has so far spent a total of 27 billion reais ($4.85 billion), which will not be taken into account when assessing the government’s goal of eliminating the primary deficit this year.
While Dino’s decision allows the potential spending to escape spending limits under the new fiscal rules and exempts it from fiscal target calculations, it will still contribute to a rise in Brazil’s public debt, which is already expected to be higher than other emerging markets. Think above the market.
(1 USD = 5.5625 R$)
