Brazil Gives Exporters a Break Offering Credit in Foreign Currencies

Dollar, euro, yen The Brazilian central bank will offer credit lines in foreign currencies as of next week in a bid to ease a credit crunch afflicting the country's exporters, the bank's president, Henrique Meirelles announced on Friday, October 17.

The central bank chief said the first such auction will take place on Monday, October 20, and it will accept Brazilian sovereign bonds as collateral for the loans. The size of the credit lines and terms of the loans will be determined at each auction.

Starting with the second auction, it will accept sovereign bonds from other countries as long as they have a minimum credit rating of A. In addition to the sovereign bonds, banks can also use export receivables as collateral for the loans.

The bank will also mandate that financial firms drawing on the funds use them to extend credit to exporters.

The government of Brazil last week allowed the central bank to extend credit lines in foreign currencies to local financial institutions and also loans through its discount window as it seeks to add liquidity to the domestic financial system.

However, officials, including President Luiz Inácio Lula da Silva, have complained in recent days that banks drawing on those funds were investing them in high-yielding government bonds instead of lending them to companies in need of credit.

Meantime, Finance minister, Guido Mantega, said that despite the deterioration caused by the global financial crisis, Brazil will grow between 4% and 4.5%.

Brazil's economy has grown rapidly in recent years but its financial markets have taken a thumping since the financial crisis took a turn for the worst after the collapse of US Lehman Brothers Holdings Inc in September.

"I still believe that we can keep growth between 4% and 4.5% for next year" Mantega told television station Globo News.

In September, he had forecast Brazil's economy would expand 5% this year and 4% in 2009.

Mercopress

Tags:

Ads

You May Also Like

Brazil Varig’s Situation Much Worse Than Expected, Says Expert

Professor Ricardo Teixeira, a Brazilian expert in business administration at the Fundação Getúlio Vargas, ...

In Brazil, Piracy Is Now Organized Crime and Not a Social Issue

The war on piracy and organized crime is gaining reinforcements in Brazil. Through a ...

200 People Feared Killed Under Mudslide in Niterói, Rio de Janeiro

200 people may have been killed in a landslide in a Rio de Janeiro ...

Brazil’s Oi Swallows Competition and Eyes Telephone Market Overseas

Brazil's Telecommunication Company Oi's president, Luiz Eduardo Falco, upon confirming the purchase of control ...

Experts and NGOs Brainstorm Ways to Ease Brazil’s Poverty

Bazilian scientists, representatives of government agencies and non-governmental organizations, and university students have been ...

Brazilian Vale Buys Mines from Rio Tinto in Canada, Argentina, Brazil

Rio Tinto Group, an Anglo-Australian company, is selling mining assets in Argentina, Brazil and ...

US Cruise Ship Allowed to Go on After Quarantine Imposed by Brazil

After Brazilian sanitary officials imposed a 24-hour quarantine following a massive outbreak of what ...

It’s Carnaval! Free Condoms For All in Brazil.

Using the slogan “Get dressed, always use a condom,” Brazil’s campaign to combat Aids ...

Brazil Urges Israel to Use Restraint in Gaza Strip

Brazil says it is worried with the developments in Gaza Strip, where 18 Palestinians ...

1989: Berlin Wall Falls and Brazil’s Cold War Comes to an End

The significant changes that took place in Brazil's politics and society in 1989 and ...