UPDATE 1-Brazil deficit jumps to 7% of GDP as coronavirus deaths mount

(Adds Almeida comments)

BRASILIA, April 11 (Reuters) - Brazil’s 2020 deficit is approaching 500 billion reais ($96 billion), or 7% of gross domestic product, even before a state aid proposal of up to 222 billion reais to tackle the coronavirus is factored in, the economy ministry said on Saturday.

In 2019, the deficit was 61 billion reais, or 0.9% of GDP, the ministry said.

“It is important that any new fiscal impact be discussed carefully to avoid an excessive growth of the primary deficit and public debt of the public sector beyond what is strictly necessary to reduce the economic and social impacts of the coronavirus crisis,” the ministry said in a statement.

Separately, Brazilian Treasury Secretary Mansueto Almeida said that the government is studying a Treasury-backed scheme to help smaller companies as many banks are not lending due to the risk of default during the coronavirus crisis.

Brazil has already announced a measure to support companies with annual sales of 360,000 reais to 10 million reais. Now, the government is looking at proposals to target smaller companies

“In all of them there is ... the Treasury will be behind it because the risk is very high,” said Mansueto. “Soon we will define which scheme will be chosen from the three or four that are under discussion.”

He did not give further details.

For the second consecutive day, Brazil’s President Jair Bolsonaro took to the streets on Saturday. A far-right former army captain, Bolsonaro has chafed at social distancing measures imposed by state governors and even his own health officials.

He wants to see the economy restarted, arguing that extended shutdowns pose a greater risk than a disease he calls a “little cold.”

On Saturday, Bolsonaro visited a field hospital being built near the capital Brasilia, and greeted supporters who flocked to see him.

Brazil is the worst-hit country in Latin America by the coronavirus outbreak.

On Saturday, Brazil’s health ministry said 1,124 people had died as a result of the outbreak, with 20,727 confirmed cases. ($1 = 5.1930 reais) (Reporting by Marcela Ayres; Editing by Daniel Wallis and Jonathan Oatis)