(Adds details of new measures and fiscal context)
By Alonso Soto
BRASILIA, June 18 The Brazilian government on
Wednesday announced measures to help exporters and local
factories, its latest attempt to bolster industries that have
yet to benefit from earlier, costly efforts.
The new measures, which include more subsidized lending to
industries and tax credits to exporters of manufactured goods,
are the latest in a string of more than two dozen failed
attempts over the last three years to invigorate Latin America's
Growing pessimism among businessmen and consumers has slowed
an economy that only a few years ago was an emerging-market
star. This year it is expected to slow further and grow just
over 1 percent.
President Dilma Rousseff is again trying to bolster
confidence. While the leftist remains the clear favorite to win
the Oct. 5 election, the combination of slow growth and high
inflation has hit her popularity.
Finance Minister Guido Mantega said the government would
also reduce the percentage of back taxes that smaller companies
have to pay in cash under its settlement program. The government
will hold the industrial tax rate for construction material and
capital goods at zero, he said.
"We need to be ready for a new cycle of economic expansion,"
said Mantega after meeting with businessmen in the presidential
palace in Brasilia. "We need to prepare our industry for that."
Analysts say past measures have had little effect on
activity because the government's repeated involvement in the
economy has raised uncertainty among investors.
The government will extend until late 2015 the Investment
Support Program, or PSI, in which state-run development bank
BNDES gives subsidized credit for companies to buy machinery,
trucks and other capital goods.
It will also re-establish and make permanent the Reintegra
program, which will give companies tax credits equivalent to
between 0.1 and 3 percent of their export revenue, Mantega said.
The measures will mean little in fiscal costs for the
government, Mantega said. Previous tax cuts and cheap loans have
reduced tax revenues, leading the country to miss key fiscal
goals in 2012 and 2013.
Past measures to stimulate consumption have also stoked
inflation and reduced the strength of the central bank's
(Additional reporting by Luciana Otoni; Editing by James
Dalgleish, Jonathan Oatis and Lisa Von Ahn)