Brasília – The Brazilian minister of Finance, Guido Mantega, announced today (9th) a series of economic incentive measures. Among them is the addition of 80 billion Brazilian reals (US$ 45 billion) in funds for the Brazilian Development Bank (BNDES) to finance investment and production development in 2010 and 2011.
The priority activities are economic and social infrastructure, purchase of capital goods (machinery and equipment for the industry sector), exports, science, technology and innovation. The Long Term Interest Rate (TJLP) will be applied.
The duration of the Program for Sustaining Investment has been extended until June 2010. Previously, the deadline was set for December this year. The program provides for BNDES financing for purchase of capital goods, exports and technological innovation. The maximum amount of financing is 44 billion reals (US$ 25 billion).
Another measure, yet to be regulated by the National Monetary Council, is the creation of a treasury note, a tool that will enable banks to obtain long-term funds to loan.
An extension was also announced on the reduction of the Tax on Industrialised Products (IPI) for capital goods, until June 2010. According to Mantega, the IPI on capital goods is now close to zero. The estimated reduction in revenues in 2010 is 369 million reals (US$ 211 million). The main items for which the tax was lowered are industrial valves, crankshafts and electronic microscopes.
The minister announced a new federal government loan of 15 billion reals (US$ 8.5 billion) to the Merchant Marine Fund. The measure meets the demand for financing to ship building.
Also announced was the lifting of the IPI, of the PIS/Cofins social contributions, and of the tax on imports of goods and services for oil refining and the petrochemical industry in the North, Northeast and Midwest regions of Brazil. The estimated reduction in revenues is 1 billion reals (US$ 572,000) in 2010.
The wind turbines used in wind energy production were permanently exempted from the IPI. According to Mantega, the government expects production of these equipments to grow in Brazil. The measure will result in reduction of 89 million reals (US$ 50.9 million) in tax revenues in 2010.
The president of the BNDES, Luciano Coutinho, announced today that the bank card’s overdraft facility has been raised from 500,000 reals (US$ 286,000) to 1 million reals (US$ 572,000). According to Coutinho, there are currently 250,000 active cards, distributed throughout 95,000 companies. The interest rate for the BNDES card is 9% per year.
According to Coutinho, another measure adopted is going to allow the Finame (a line of credit for machinery and equipment purchases by micro and small businesses) to borrow funds abroad, through bank accreditation in interested countries, mainly in Latin America and Africa. The objective of the measure is to enable Brazilian exporters to supply equipment and financing to foreign buyers. According to Coutinho, in Argentina the negotiation has been nearly concluded with the Itaú bank.
Another measure is the clearing of funds to increase the capital in the auto parts industry by up to 30%, benefitting natural persons and companies. The objective is to include new businessmen in the capital goods sector.
*Translated by Gabriel Pomerancblum
