Loading ...News - Brazil to Cut Taxes, Lower BNDES Rate, Mantega Says
June 29 (Bloomberg) - Brazil will cut sales taxes on 70 capital goods and lower the long-term interest rate charged by the state development bank in a bid to speed up the economy’s recovery, Finance Minister Guido Mantega said.
Mantega, speaking to reporters today in Brasilia, said the government will also extend existing tax breaks on the purchase of cars, home appliances, construction materials and some food staples until at least October.
“The measures announced today are in the right direction,” said Zeina Latif, chief economist at ING Bank NV in Sao Paulo. “They tend to work because the economy isn’t too depressed. If we had a depressed economy with falling income the measures wouldn’t be so efficient because demand depends on prices and income.”
The rate charged by the BNDES, as the development bank is known, will be reduced to a record 6 percent, from 6.25 percent, at tomorrow’s national monetary council meeting, Mantega said. The so-called TJLP rate has remained unchanged at 6.25 percent since July 2007.
Brazil economic policy secretary Nelson Barbosa said wind- power generators would be among the capital goods included in the tax-cut plan.
Brazil fell into its first recession since 2003 this year as credit and consumer spending dried up and the global recession reduced demand for its commodity exports. Latin America’s largest economy began showing signs of growth in the second quarter, as consumer confidence has risen each month since February’s record low and government spending increased.
The central bank last week said it expects gross domestic product to expand 0.8 percent this year, exceeding private analysts’ estimates for a 0.5 percent contraction, according to a survey published today.
The Rio de Janeiro-based BNDES is seeking to lend as much as 120 billion reais ($61 billion) this year, 30 percent more than last year, to ease businesses’ access to credit and boost economic growth.
Source: Bloomberg.
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