Economy

Brazil government to inject $30 billion into economy to combat coronavirus hit

imageEconomy2 hours ago (Mar 16, 2020 08:09PM ET)

(C) Reuters. Brazil’s Economy Minister Paulo Guedes speaks during a press conference to announce economic measures due the coronavirus outbreak in Brasilia

By Marcela Ayres

BRASILIA (Reuters) – Brazil’s government on Monday announced emergency measures to inject nearly 150 billion reais ($30 billion) into the economy to soften the blow from the coronavirus pandemic.

The fiscal boost represents a rapid turnaround for Economy Minister Paulo Guedes who, as recently as the weekend, insisted that Brazil could swim against the global tide and grow by as much as 2.5% this year.

The package does not contain new money, but is a range of measures mostly bringing forward social assistance payments, deferring company taxes, and making it easier for people to access workers’ severance funds.

According to the Economy Ministry, 83.4 billion reais will be freed up for the most vulnerable people in society, 59.4 billion reais will help companies keep jobs filled, and 4.5 billion reais will go to directly combating the coronavirus.

Guedes said budget freezes this year were inevitable given the sharp shock to the economy. He also noted a likely 16 billion reais hole in the budget because the privatization of utility Eletrobras may not go ahead as planned.

The fiscal package follows a series of measures announced earlier on Monday by the central bank to increase liquidity and lending in the banking system.

Speaking to reporters after another wild session on global markets, which saw Brazil’s stocks plunge 13% and the currency slide to a new low, Guedes said the hit to the economy from the effects of the coronavirus could be severe and that the government’s growth forecast was being reviewed.

The government has come under pressure to relax its strict fiscal rules to support the economy, which a growing number of economists now say will slip into recession. Guedes insisted that the spending ceiling cap rule will not be changed, but said the budget deficit goal is under review.

Among Monday’s measures, bringing forward the payment of the second installment of the so-called 13th salary for retirees to May from December will put 23 billion reais into their pockets, while a three-month deferral for small and medium-sized firms’ “SIMPLE” corporate taxes will save them 22 billion reais, the Economy Ministry said.

The government also announced a 3.1 billion reais boost to the ‘Bolsa Familia’ assistance for some of Brazil’s poorest families that will bring more than 1 million new people in the program.

But that 3.1 billion reais will have to be clawed back from elsewhere, Treasury Secretary Mansueto Almeida said.

Brazil government to inject $30 billion into economy to combat coronavirus hit

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

Your daily news source covering investing ideas, market stocks, business, retirement tips from Wall St. to Silicon Valley.

Disclaimer:

TheProficientInvestor.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 TheProficientInvestor. All Rights Reserved.

To Top