Brazilian Government Announces R$ 83 Billion in Credit to Revive the Economy

01/29/2016 - 09h08

In an effort to revive the economy, the Brazilian government announced on Thursday (28) measures to unlock up to R$ 83 billion (US$ 20.50 billion) in credit to sectors such as housing, agriculture, infrastructure and small and medium businesses.

The package includes the active participation of public banks and the use of FGTS (the Length-of-Service Guarantee Fund) and it also offers workers the possibility to use resources from their own funds as a collateral to obtain payroll loans (that are deducted directly from the workers' payrolls).

The measures were announced during a meeting of the Council for Economic and Social Development, which has 92 members and includes businessmen, trade unionists and representatives of the civil society.

Amid doubts from the private sector about the potential power of these measures to stimulate new loans in the face of weak demand, Finance Minister Nelson Barbosa said that, in his point of view, most of the credit lines that are being offered now had supply constraints.

The big news was that private sector workers subject to unfair dismissal can now use the fine paid by employers at the moment of their dismissal and also part of the balance of their FGTS account as collateral to get a payroll loan. This new credit category is expected to generate US$ 17 billion (US$ 4.19 billion) in new loans.

The objective of this measure is to encourage the granting of payroll loans, which are cheaper, to private sector workers. However, the use of the above-mentioned fine and the FGTS resources as collateral will reduce the compensation received by workers in case of dismissal.

Translated by CLÁUDIA GONÇALVES

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	Pedro Ladeira/Folhapress
	The measures were announced during a meeting of the Council for Economic and Social Development