Brazil sees aid measures from floods hitting its budget by at least $2.6 billion

Flooding due to heavy rains in Rio Grande do Sul

By Bernardo Caram

BRASILIA (Reuters) - Brazil estimates aid measures taken by authorities after deadly floods in its southernmost state will cost at least 13.4 billion reais ($2.6 billion) from its budget, according to finance ministry data compiled by Reuters.

Heavy rains, which have battered Brazil's Rio Grande do Sul state since late April, caused historic floods that killed over 150 people, while nearly 100 residents are still missing and more than 500,000 have been displaced, official data shows.

A plan to guarantee credit lines with lower interest rates for small businesses and a cash handout program for families affected by floods are among the measures accounted for in the current fiscal estimate.

However, the number is likely to rise, as the ministry has not disclosed the fiscal impacts from other measures recently announced such as a plan to buy homes from the private sector to house displaced people.

Not all the aid measures taken by the government have impacts on its budget, since part of them only bring forward payments of social benefits. A proposed freezing of state debt payments has also no effect due to government accounting specifications in the country.

Brazil's fiscal situation has been closely watched by investors after federal government decided to loosen its 2025 fiscal target earlier this year, even before the rains in Rio Grande do Sul.

($1 = 5.1038 reais)

(Reporting by Bernardo Caram in Brasilia; writing by Andre Romani; Editing by Sandra Maler)