Brazil's Government Takes Measures To Boost Consumer And Capital Market Credit

• Brazil's government announced a package of 13 measures last Thursday to ease consumer access to credit and reduce associated costs in the capital and insurance markets, a move the new leftist administration hopes will boost investment and revitalize a slowing economy.
• Among the measures is the federal government's proposal to provide counter-guarantees for public-private partnership projects at the state and municipal levels. Additionally, the package includes a decree to allow the issuance of bonds with an income tax exemption for investments in sectors such as healthcare, education, and public security.
• According to Treasury Secretary Rogerio Ceron, the move is expected to mitigate financial and political risks seen by private investors, especially foreign ones, attracting funding for projects such as the construction of daycare centres and sanitation facilities, which are dear to the new government of President Luiz Inacio Lula da Silva.
• During a news conference, he announced that the Inter-American Development Bank (IDB) had confirmed the availability of credit lines for operations within this framework. These credit lines are being assessed by development bank BNDES (The National Bank for Economic and Social Development), state-owned Banco do Brasil, and other private lenders.
• Brazil's Secretary of Economic Reforms, Marcos Barbosa, said the measures aim to strengthen the credit market in the long term, paving the way for the country's capital market to become as robust or larger than the $US988Bn banking market.

(Source: Reuters)