His comments come amid concerns of the new leftist administration of President Luiz Inacio Lula da Silva regarding the impact of high borrowing costs on economic growth, as the country’s benchmark interest rate remains at a six-year high of 13.75% to combat inflation.
“The government is carefully monitoring the credit market to ensure liquidity and access,” Ceron told a news conference. “Possible needs for specific sectors are being discussed, such as small and medium-sized companies, but this is still in the initial stage of discussion,” he added.
Outstanding loans in Brazil decreased by 0.3% in January, marking the first decline in a year. However, the central bank highlighted the seasonal aspect of the result and said it was still too early to evaluate whether Brazilian retailer Americanas SA bankruptcy protection is impacting the credit market.
During the press conference, Ceron stated that a broad consumer debt renegotiation program is in its final stage and will be announced soon.
The government’s idea is to use public funds that already exist to guarantee the renegotiation without any fiscal impact, although Ceron did not rule out the need for new contributions from the Treasury this year or next to make the program viable.
The secretary also stated that the increase in the minimum wage promised by Lula will cost about 5 billion reais, and the rise in income tax exemption will cost another 3.2 billion reais, but added other compensatory measures would accompany them.
Source: Economy - investing.com
