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:

You May Also Like

Brazil: Lula’s Words Alone Won’t Do

Brazil’s pension reform seems in jeopardy. By showing weakness against the judiciary, the Lula ...

Brazil Spends Close to US$ 400,000 to Sacrifice 6,000 Sick Cattle

The government of Paraná, a state in southern Brazil, authorized the disbursement of US$ ...

Brazil’s Pork Exports Zoom Up 136%

Earnings from Brazilian pork exports rose 136% in the first two months of 2005, ...

Brazil’s Unemployment Rate Rises to 9.6%

Brazilian Latin American markets advanced, with Mexican shares posting some of the region’s biggest ...

Lula Says Brazil Remains Committed to Haiti and Will Probe General’s Death

In a note, Brazilian President Luiz Inácio Lula da Silva expressed profound sadness at ...

Brazilian business women

Brazil Women Beat French and Swedish Colleagues in Entrepreneurship

According to data from the London-based Global Entrepreneurship Monitor (GEM) survey, released this Wednesday, ...

For Lula’s Advisor Left in Brazil Is Not Disunited as in Chile

Brazilian Marco Aurélio Garcia, president Luiz Inácio Lula da Silva’s main advisor in international ...

Chief of Staff Resignation Makes Brazil Go Shopping

Latin American shares powered higher, lead by gains from both Brazil and Mexico. Brazilian ...

Brazilian President’s ‘Strong Emerging Countries’ Win the Day at G-20 Summit

Global leaders at the G-20 financial summit in Washington have pledged to work together ...

Prainha do Canto Verde, in Brazil's Northeastern state of Ceará

Brazil’s Small Beach Town Learns How to Bring Tourists and Bar Speculators

"People called me crazy," says João Fernandes Filho, remembering the launch of his small ...