Bolsonaro sanctions law releasing US$992 million to small businesses in Brazil
RIO DE JANEIRO, BRAZIL – With vetoes, president Jair Bolsonaro has sanctioned the law that makes the PRONAMPE (National Program of Support to Micro and Small Businesses) permanent. The text passed by the National Congress was published in the Federal Gazette on Friday, June 4, and will grant R$5 billion (US$992 million) to eligible companies in 2021.
Created during the novel coronavirus pandemic to provide credit to micro and small companies, the program has granted over R$37 billion to MEIs (Individual Micro-entrepreneurs), micro-enterprises and small businesses.
According to the text of Law 13.999, as published, the measure aims to “consolidate small businesses as agents for sustaining, transforming, and developing the national economy.”
Last year, PRONAMPE granted about R$37 billion in loans, with 85% of the losses guaranteed by the National Treasury, with interest based on the SELIC rate plus 1.25%. However, the interest rate will be higher (SELIC + 6%) in this round, in addition to the lower coverage of defaults, but the financing term has been extended from 36 to 48 months.
The bill to establish PRONAMPE as permanent, authored by Senator Jorginho Mello (PL-SC), authorizes the federal government to increase its share in the FGO (Operations Guarantee Fund) for the granting of guarantees under the program.
“It was about R$37.5 billion in credit granted to over 470,000 companies across Brazil, a huge success,” said Mello in advocating the bill. “Without a shadow of a doubt, PRONAMPE saved thousands of companies and, consequently, thousands of jobs. Now we want to extend a credit program that was fantastic,” he added.
2022
Despite the sanction of the law making PRONAMPE permanent, the funds for the credit line from 2022 on will depend on budget space and negotiations in the National Congress.
This year, PRONAMPE, as well as other initiatives to tackle the impact of the coronavirus pandemic, such as the emergency aid, will be financed with the opening of extraordinary credit, outside the fiscal rules, such as the spending cap.
However, as of 2022, the program will have to “fight” for funds with other non-compulsory expenses, which have increasingly less space in the federal government’s budget.
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