BRASILIA, June 17 - Brazil's Finance Ministry signaled support for a rural debt renegotiation initiative but stressed the need for the measure to be more narrowly targeted, Finance Minister Dario Durigan said at a congressional hearing after the Senate passed a sweeping aid bill for the agricultural sector.
The Senate-approved proposal would open the door to subsidized credit for a wide range of cases in the sector. Durigan told lawmakers the bill carries an estimated fiscal cost of about 140 billion reais over 13 years in Treasury subsidies, a figure the government views as excessive because the measure covers scenarios beyond climate-related shocks and extends to broader economic difficulties.
"There is no scorched-earth scenario in agribusiness in terms of widespread defaults," Durigan said, noting the overall health of the industry. He cited a 5-6% delinquency rate in rural lending at state-run Banco do Brasil, the largest lender in the sector, and said roughly 95% of agribusiness in the country's economy remains healthy.
The bill approved by the Senate now moves to the lower house for further consideration. Durigan said the government intends to engage constructively to reduce the proposal's fiscal burden but reiterated its preference for a more targeted program that would prioritize support linked to climate events rather than a broad set of economic problems.
Consumer debt program and other measures
Durigan provided an update on the Desenrola consumer debt renegotiation program, recently relaunched by President Luiz Inácio Lula da Silva. According to the minister, the initiative has already renegotiated between 20 billion and 30 billion reais so far, covering roughly one-third of the estimated 80 billion to 90 billion reais in eligible liabilities.
He said a new phase of the program will be launched soon that will target consumers who are current on their obligations, in contrast to earlier versions of the plan which 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, though he did not provide additional numerical details in the hearing.
Fuel subsidies and oil tax
On energy-related fiscal support, Durigan confirmed the government would remove subsidies on diesel and gasoline if oil prices stabilize at lower levels as tensions involving Iran ease. He added that the same scenario would eliminate the need for the country’s temporary oil export tax.
Throughout his remarks, Durigan emphasized a posture of constructive engagement with Congress while pressing for measures that he said would limit long-term fiscal exposure.
Exchange rate used in the remarks: $1 = 5.0579 reais.