Brazil unveils more steps to contain credit crisis

BRASILIA, Brazil Nov 6 (Reuters) - Brazil will grant companies more time to pay taxes and will provide 10 billion reais ($4.6 bln) in loans for working capital, the country's Finance Minister Guido Mantega said on Thursday, in the latest step to help the economy brave a global credit crisis.

Companies will get an extension to pay wholesale taxes on industrial products as well as on social welfare contributions.

The national development bank, BNDES, is to offer the 10 billion reais line of credit.

"It's another 10 billion reais, on top of the 90 billion reais which the (BNDES) already has to irrigate the market directly," Mantega told reporters at an event in Brasilia.

Mantega also said the government had instructed state-run bank, Banco do Brasil (BBAS3.SA), to make available a total of 4 billion reais to automakers' financing units to increase car loans and help spur sales.

"With these resources, we're ensuring that there will be enough financing available for the automobile industry to maintain sales in November and December," Mantega said.

New automobile sales in Brazil slumped 11 percent in October from September, the national automakers' association Anfavea said earlier.

$40 BLN SPENT

Brazil's government has taken a series of measures in recent weeks aimed at easing the global liquidity crunch, such as reducing banks' mandatory reserve requirements, offering foreign-exchange swap auctions, and allowing bigger banks to take over loan portfolios of distressed smaller banks.

The country's economy has been growing above 5.0 percent annually.

Central Bank President Henrique Meirelles, speaking at the same event, said Brazil had spent $40 billion in foreign exchange interventions in a bid to meet surging demand for U.S. dollars in the currency market.

Despite the massive interventions, Brazil's international reserves have only been reduced by $5.1 billion, he said. Foreign exchange swaps it used do not eat into the reserves.

The central bank held such swap auctions daily and regularly sold dollars in the spot market in recent weeks to boost liquidity as the real plunged nearly 12 percent against the dollar in October.

The government also offered bridge loans to exporters and farmers seeing demand slump.

Mantega said the worst of the financial crisis had passed and that Brazil had a solid fiscal situation and robust domestic demand.

"Our outlook is that we can continue growing around 4 percent in 2009," Mantega said.