The Brazilian government has injected an estimated 164 billion US dollars, mostly to banks and corporations, since the beginning of the financial downturn, according to the official news agency.
The financial effort has concentrated on four areas: reduction in banks technical deposits; interventions in the money exchange market to contain the US dollar; lesser or elimination of taxes and credit lines for corporations and consumers. Agencia Brazil estimates that 60% of those authorized government resources went straight to the financial system. Since the first financial problems the Brazilian government targeted restabilising credit to productive activities as the main priority, and then authorized the reduction of banks technical deposits, that is funds banks must hold at the Central Bank or to back up loans. This mechanism enabled the liberation of an estimated 44 billion US dollars, which helped pump liquidity to the system. However markets did not recover their full dynamics according to the all powerful Confederation of National Industries and the Sao Paulo Federation of Industries. President Lula da Silva admitted there have been delays in the reactivation of financing but he attributed to the time that elapses before the practical implementation of measures. Agencia Brasil also reveals that since the beginning of the financial turbulences the Bank of Brazil sold 53 billion US dollars in the money exchange market in an attempt to keep the US dollar from appreciating too much. The local currency Real has lost 32% of its value against the US dollar. Over half those funds were future contracts, or swaps which have the backing of government but do not affect reserves. Besides swaps the Brazilian central bank sold 9.8 billion US dollars of its international reserves, which now stand in the range of 200 billion US dollars.