Brazil to up loans to states, may drop tax: report
SAO PAULO (Reuters) - The Brazilian government, worried over the impact of global market turmoil on economic growth, will lend up to 10 billion reais ($4.8 billion) to states and may reverse a recent tax hike on corporate loan transactions overseas, Finance Minister Guido Mantega told a local newspaper on Wednesday.
Mantega said the emergency credit line, which will be financed by state development bank BNDES, will be presented to the nation's 27 state governors at a ceremony in Brasilia this Friday, O Globo newspaper reported.
The newspaper also said that the credit line is part of a package to prevent economic growth this year from slowing further. Last year, Latin America's largest economy expanded 2.7 percent, and there are risks that growth this year comes below that number, Globo said.
Mantega told the paper that the government acknowledges the necessity to "change the path of economic policy and combine fiscal adjustment policies with different types of stimulus" to combat a financial crisis stemming from the worsening of the euro zone debt crisis.
Beset by fallout from the global downturn, which has sapped demand for commodity exports and discouraged investment by local business and industry, Brazil is struggling to revive an economic boom that led to annual growth of 7.5 percent in 2010 -- the strongest showing of growth in a quarter century. The economy expanded 0.2 percent in the first quarter on a sequential basis.
A finance ministry spokeswoman in Brasilia confirmed that the interview took place on Tuesday, but declined to give further details.
If the crisis aggravates further, the government might consider eliminating some of the measures it adopted more than a year ago, when the nation's currency was gaining ground against the U.S. dollar, Mantega told Globo.
"The first in the list" of those measures to be reversed would be a surcharge on the so-called IOF tax on loans of up to five years obtained by local companies overseas, Mantega told the newspaper.
"Some of those measures could be revisited at their very moment," Mantega said. "The hike in the IOF tax for loans ... is a very rigorous one."
($1 = 2.07 Brazilian reais)
(Reporting by Guillermo Parra-Bernal Editing by W Simon)
- Atheists face death in 13 countries, global discrimination: study
- South Africa admits mistake over 'schizophrenic' Mandela signer |
- Missouri executes man for killing good Samaritan motorist in 1994
- Thai military chief rebuffs meeting request in blow to protesters |
- Apple scores legal victory over Samsung in South Korea
Time magazine named Pope Francis as its Person of the Year, crediting him with shifting the message of the Catholic Church. Slideshow