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Brazil expected to announce massive injection of loans to revive the economy

Thursday, January 28th 2016 - 06:49 UTC
Full article 16 comments
Barbosa will make the announcement with President Dilma Rousseff as she presides over a meeting of the Council for Economic Development Barbosa will make the announcement with President Dilma Rousseff as she presides over a meeting of the Council for Economic Development
Brazil is fighting a two-front battle against double-digit inflation and what economists forecast will be the worst recession since 1901. Brazil is fighting a two-front battle against double-digit inflation and what economists forecast will be the worst recession since 1901.
As Brazil’s recession deepens and Rousseff braces for impeachment proceedings in congress, the government may be more willing to reverse some austerity measures. As Brazil’s recession deepens and Rousseff braces for impeachment proceedings in congress, the government may be more willing to reverse some austerity measures.

Brazil’s Finance Minister Nelson Barbosa is expected to announce as much as 60bn Reais (US$15bn) in loans as the government seeks to revive growth amid the worst economic downturn in over a century.

 Barbosa will make the announcement with President Dilma Rousseff as she presides over a meeting of the Council for Economic Development, said a person familiar with the discussions. Even as he unveils the credit plan, Barbosa will also reaffirm a commitment to fiscal adjustment, the person added, asking not to be named because the speech is not public yet.

Brazil is fighting a two-front battle against double-digit inflation and what economists forecast will be the worst recession since 1901. Fiscal consolidation efforts initiated by Barbosa’s predecessor, Joaquim Levy, to address a record budget gap led the government last year to scale back on credit subsidies.

In 2016, as Brazil’s recession deepens and Rousseff braces for impeachment proceedings in congress, the government may be more willing to reverse some of Levy’s austerity measures.

Earlier on Tuesday, Deputy Labor Minister Claudio Puty said credit lines for small companies and for the purchase of construction goods and home renovation are among steps being considered. The government also discussed using a workers social security fund known as FGTS as collateral against personal loans for consumers with lower interest rates, Puty said.

Categories: Economy, Politics, Brazil.

Top Comments

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  • yankeeboy

    Loans won't help.
    They're following the Chinese model without the huge reserve account.

    You can't fix a structural problem and a decade+ of a fake economy with a little bit of cash..

    This is only going to get worse until there's a revolt for both countries.
    Let's see which one happens first.

    Jan 28th, 2016 - 12:46 pm 0
  • 313toBioBio

    “Brazil is fighting inflation” Uhm. Brazil is in the fight of its life against a marxist regime and its hijacking of the central bank and oil company. The capital will continue to fly out and now it's taking down finally chilean stocks and US markets.

    Jan 28th, 2016 - 05:27 pm 0
  • Jack Bauer

    There they go, Dilma and Barbosa, just digging the hole deeper. More than one-third of the population are already in debt up to their necks, and the Government thinks that these people will take new credit - if they can qualify - to buy new homes ......especially when 41% of credit takers for new homes, in 2015, defaulted and had to return the homes to the banks...
    They think they can spend 'themselves' - or rather, the 'people's resources' - out of the recession.

    Jan 28th, 2016 - 06:43 pm 0
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