Brazil Announces R$83 Billion Plan to Jumpstart Economy

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The Brazilian government announced on Thursday measures to boost production and recover the country’s growth, including a credit injection of R$83 billion (US$20.4 billion) into the economy. Among the measures announced are investments in infrastructure and more available credit from state-run banks to small and medium sized companies and for important economic sectors such as agriculture and construction.

According to Finance Minister, Nelson Barbosa, the measures will not incur extra costs for the government. “The greater part of the initiatives is administrative. There will be no additional cost for Brazilian taxpayers. We want to make better use of the available resources,” said Barbosa during a press conference to announce the measures.

In addition to freeing up credit for industry and agriculture, the government will also ask Congress to approve a measure that would allow laid off workers to use their FGTS (workers’ pension fund) as a guarantee to obtain loans. According to Brazil’s Central Bank the total volume of credit offered by banks last year increased by only 6.6 percent, to R$3.21 trillion, the lowest annual growth ever registered.

Overall the measures were well received by the Brazilian business community, but there are doubts as to if these measures will be sufficient to reverse the declining consumer confidence and increasing unemployment rates.

“Our investments are present, the productive capacity is present,” Luis Moan, president of the National Automakers Association (Anfavea) was quoted as saying by Agencia Brasil. “What we need is to once again generate consumer confidence. What halts the domestic market today is the fear of losing one’s job.”