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Brazil’s Assurance: We’re Not Bankrupt, We’re Part of Solution

Brazil's new strategy for maintaining investment and expanding credit is reducing interest rates on loans granted by the Bank of Brazil and the Caixa Econômica Federal (Federal Savings Bank). The announcement was made by the Chief of Staff of the Presidency, minister Dilma Rousseff.

"The president is extremely worried about the cost of credit, and is adopting all of the necessary measures in order to reduce the spreads (difference between the interest rates that banks receive and what they loan to third parties) of public banks," said the minister upon attending the 90th anniversary of Farmanguinhos, a medication manufacturing unit of the Oswaldo Cruz Foundation (Fiocruz).

According to Dilma, president Lula wants to implement an interest rate policy compatible with the reality of the country, especially concerning spreads.

"There has been no increase in the amount of interest received in relation to what is being charged when equal amounts of capital are lent. We want to expand our investment capacity, rather than follow old recipes that have been used before, such as reducing credit, consumption and investment," said the minister.

She assured that the Growth Acceleration Program (PAC) of the Brazilian federal government is going to be maintained, as well as investment in the pre-salt area, among others. "We are not bankrupt. We are not part of the problem, we are part of the solution."

The Brazilian government announced in Brasí­lia (capital of Brazil) new measures aimed at boosting the economy, among them new, lower income tax rates, reduction of the Financial Operations Tax (IOF) in credit operations for natural persons, reduction of the Industrialized Products Tax (IPI) for the auto industry and dollar auctions by the Central Bank of Brazil using foreign reserve funds. Tax waiver from fiscal measures should total 8.4 billion Brazilian reais (US$ 3.4 billion).

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