Brazil launches aid package for victims of Rio Grande do Sul floods

Finance Minister Fernando Haddad (center) announces the government's plan for the 1.4 million hit by floods in the state of Rio Grande do Sul as investors keep a wary eye on public spending. Photo: Ricardo Stuckert/PR

Finance Minister Fernando Haddad on Thursday announced a BRL 50.9 billion (USD 9.8 billion) package of measures to address the public calamity in the state of Rio Grande do Sul, which has been ravaged by extreme floods.

The measures will be included in a provisional decree to be signed by President Luiz Inácio Lula da Silva, which will take effect immediately. Such decrees are then sent to Congress, which has up to 120 days to review them and decide whether or not to enact them into law.

The measures include bringing forward several previously scheduled payments, such as federal benefits for more than 700,000 formally employed workers in the state, unemployment insurance for 140,000 people, income tax rebates for around 1.6 million people, and Bolsa Família cash-transfer payments for 538,000 families.

The government will also commit BRL 200 million in funds for public bank investments across the state and create a task force to fast-track the analysis of BRL 1.8 billion in credit requests from 14 municipalities.

Additionally, the government will contribute BRL 4.5 billion in a credit fund for small companies (Pronampe) and BRL 1 billion to subsidize interest rates under the same program. The package also includes a BRL 500 million contribution to an emergency credit program and the postponement of tax payments for at least three months for around 203,000 companies in Rio Grande do Sul, totaling BRL 4.8 billion in delayed revenue.

Finally, the government will waive a requirement for companies and rural producers to request credit from public banks and allocate BRL 1 billion to subsidize credit to small farmers.

Mr. Haddad said that the measures will provide “an important injection of funds” to Rio Grande do Sul at an early stage in the crisis, which might require additional measures in the future. According to a public calamity decree approved earlier this week, the additional expenses will not count toward the government’s 2024 fiscal goal.

According to state authorities, more than 1.4 million have been affected by the ongoing crisis in Rio Grande do Sul. The death toll currently sits at 107 people, with another 136 missing. Over 230,000 people have been displaced, more than 67,500 of which are in shelters.