BRASILIA, June 17 (Reuters) – Brazil’s government backs a rural debt renegotiation program but wants it more targeted, the Finance Ministry said on Wednesday.
Speaking at a congressional hearing after the Senate approved a sweeping aid bill offering subsidized credit to the sector, Finance Minister Dario Durigan said the government aims to be “constructive” to curb the proposal’s fiscal cost.
The current bill implies about 140 billion reais ($27.68 billion) in Treasury subsidies over 13 years, he said, which the government sees as excessive as it covers a broad range of cases beyond climate shocks, including general economic difficulties.
The bill now moves to the lower house.
Durigan added that 95% of agribusiness in Latin America’s largest economy remains healthy, citing a 5-6% delinquency rate in rural lending at state-run Banco do Brasil, the sector’s biggest player.
“There is no scorched-earth scenario in agribusiness in terms of widespread defaults,” he said.
CONSUMER DEBTS
Durigan said the Desenrola consumer debt renegotiation program recently relaunched by President Luiz Inácio Lula da Silva has already covered about one-third of eligible liabilities.
The program, which offers federal guarantees to help households refinance debt at lower rates, has renegotiated between 20 billion and 30 billion reais ($4 to $5.9 billion) so far, out of an estimated 80 billion to 90 billion reais in eligible debt.
According to the minister, a new phase will be launched soon targeting consumers who are current on their obligations, unlike earlier versions focused on delinquent borrowers.
Durigan also said the government will raise the eligibility ceiling for the simplified tax regime for micro-entrepreneurs, known as MEI.
Separately, he confirmed the government would scrap subsidies on diesel and gasoline if oil prices stabilize at a lower level as tensions involving Iran ease, adding that such a scenario would also remove the need for the country’s temporary oil export tax.
($1 = 5.0579 reais)
(Reporting by Marcela Ayres; Editing by Aurora Ellis)