(Bloomberg) -- Brazil is ready to tap debt markets with a second sale of sustainable bonds as soon as volatility subsides, said Treasury Secretary Rogerio Ceron. 

The plan is to issue notes — both regular and ESG — at least twice a year, Ceron said in an interview. Brazil’s first ESG issuance happened in November, when the Treasury sold $2 billion in bonds due in 2031, marking a long-awaited deal to support President Luiz Inacio Lula da Silva’s environmental agenda. In January, the government sold $4.5 billion in bonds due in 2034 and 2054, a record offering for Latin America’s largest economy. 

“We need to wait a little longer,” Ceron said in an interview in his office in Brasilia on Monday. “Uncertainty surrounding when interest rates will begin to fall in the US is still generating a lot of volatility.”

Changing bets on when the Federal Reserve will begin lowering rates have roiled risk assets in the past few months. For Brazil, concerns about government overspending and growing intervention in the economy have added to concerns. 

Read More: Investors Sour on Brazil Stocks on Intervention, Fed Fears

Ceron said there is no reason to doubt the government’s commitment to a balanced primary budget. 

“The government is not closed to debating spending,” he said. The Treasury chief also sees growing interest from foreign investors in Brazil’s local debt market, which increases the appetite for longer term notes, such as inflation-linked bonds. The Treasury, he says, could boost sales to keep up with higher demand if necessary.

“We always try to keep up with demand,” Ceron said. 

Aid

While the government is committed to its fiscal goal, it will keep providing financing to the southern state of Rio Grande do Sul, Ceron said. Heavy rains sparked floods that have left at least 169 dead and entire cities under water in the state.

So far, Brazil has announced about 65 billion reais ($12.6 billion) in aid — about 13 billion reais of which would have impacted Brazil’s fiscal target, but were exempted from spending rules by a decree signed by Lula. Ceron estimates the full impact on public accounts would have reached some 20 billion reais. 

Read More: Brazil Eyes Further Aid After $10 Billion Plan to Combat Floods

Lula’s approach to spending is under scrutiny from investors as Finance Minister Fernando Haddad continues his push to zero the country’s primary fiscal deficit, which excludes interest payments, this year. Ceron said that spending related to pensions and other social benefits needs to be monitored as their fiscal impact grows, and that Brazil needs to review its public expenditures to eliminate distortions. 

He cited the fact that military members who are expelled from the armed forces still receive lifelong benefits as an example.

“It is obvious that there is a need to improve programs,” Ceron said.

The government, meanwhile, has already prepared a set of measures to offset the cost of a payroll tax exemption for companies and municipalities that Brazil’s congress extended over Haddad’s objections, Ceron said during a Tuesday news conference. The exemption will cost as much as 25 billion reais, according to the Finance Ministry.

--With assistance from Bruna Lessa.

(Updates with additional comments from Ceron in final three paragraphs.)

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