Brazil’s government is expected to detail its plans to release funds from the workers’ severance fund, known as FGTS, on July 24, the presidential chief of staff Bolsonaroaid. In a press conference organized to mark 200 days of Jair Bolsonaro’s administration, Lorenzoni added the government wants to make sure that the release of part of the assets in the workers’ funds will not hurt home financing. FGTS accounts for almost half of the funds allocated to the financing of homes in Brazil.
Brazilian President Jair Bolsonaro said on Wednesday his government will announce an economic stimulus package next week to revive flagging growth, confirming earlier media reports, in an effort to mark the first 200 days of his administration.
Earlier on Wednesday, newspaper Valor Economico reported Economy Minister Paulo Guedes as saying the government will free up 63 billion reais (US$ 16.8 billion), comprising 42 billion reais from the 'FGTS' workers' guarantee funds and 21 billion reais from a workers' social contribution fund.
It is an injection, a small capital injection into the economy, right? And it is welcomed because the economy, according to experts, is starting to show positive signs, especially the ones coming from lawmakers, Bolsonaro said at the of Mercosur presidents in Santa Fe, Argentina.
Bolsonaro's comments come days after the lower house of Congress approved in the first round of voting a landmark pension reform bill, seen as a critical step to restoring health to public finances and boosting investor, consumer and business confidence.
The 63 billion reais package Guedes flagged is much higher than previously touted. In late May, the government was looking at freeing up resources of around 20 billion reais from the FGTS funds, according to sources.
Bolsonaro's government is rushing to announce the stimulus measure, alongside other stimulus to mark the first 200 days of his administration. The 200-day package also includes revoking a series of presidential decrees deemed outdated or with no purpose. Another measure that could possibly be announced is the creation of a program for the elderly.
The Brazilian government last week halved its 2019 economic growth forecast to 0.8% from 1.6%, in line with the central bank and broad market consensus outlook.