Brazil Fights Crisis with US$ 3.6 Bi in Tax Cuts

Brazilian withdraws from ATM In order to prop the slowing Brazilian economy and meet a 4% growth target in 2009, Brazil's government will cut taxes by 8.4 billion reais (approximately US$ 3.6 billion), Finance Minister Guido Mantega and Central Bank president Henrique Meirelles announced Thursday, December 11, in Brazilian capital BrasÀ­lia.

The stimulus plan will also allow the Central bank to use international reserves to help Brazilian corporations access to credit thus easing pressure on the weakening local currency.

The tax cuts on personal income, consumer loans and automobiles will help sustain economic growth as demand for commodity exports dries up, Mantega said.

"If companies have the courage to keep investments and avoid layoffs, we'll be able to meet our growth target," Mantega told reporters in Brasilia.

Brazil's economic expansion may slow by more than half next year to the lowest level since 2003 as the first crisis since World War II to affect the US, Europe, Japan and China at the same time looms over Latin America's biggest economy.

Analysts expect Brazil's economic growth to fall to 2.5% in 2009 from 5.2% this year, according to a Central bank survey published earlier this week.

Demand for loans made through the banking system may total US$ 10 billion and be limited to 125% of the amount of debt maturing through the end of 2009, Central Bank President Henrique Meirelles said.

"The measure takes pressure from the credit market in real and increases the availability of US dollars in the Brazilian currency market" Meirelles said at the press conference with Mantega.

The Real jumped 3.4% on Thursday, the most in two weeks, to 2.3659 per US dollar. The Brazilian currency since September has lost 32% of its value against the greenback.

Mercopress

Tags:

You May Also Like

Portugal Invests Over Half a Billion Dollars in Brazil. A 49% Jump

Direct investment in Brazil from Portugal rose 48.9% in 2007 in comparison with the ...

Brazil Again Threatens to Break Patents of 4 AIDS Drugs

Brazil intends to break the patents of four anti-retroviral medications, if American laboratories are ...

Brazil Offering Loans to Environmentally Friendly New Companies

Brazilian companies with innovative, socially impactful, environmentally positive projects are eligible to register for ...

Brazil Gets Ready to Cash Its Carbon Credits

Alongside India, Brazil holds a leadership position in the Clean Development Mechanism (CDL) market, ...

Brazil May Offer Tax Cuts to Encourage Long-Term Lending by Banks

The Finance minister of Brazil, Guido Mantega has just informed that foreign-based companies operating ...

The African Diaspora Gathers in Salvador, Bahia, Brazil

From today, July 12, to Saturday, July 15, the city of Salvador, in the ...

Merkel Wouldn’t Listen to Brazil’s Suggestions and This Bothered President Rousseff

Dilma Rousseff, the president of Brazil is not happy with her colleague German chancellor ...

Brazil Hopeful Europe Will Halt Brazilian Beef Ban

Paris-based OIE (Animal Health Organization) is expected to declare 10 states of Brazil, including ...

Lula Asks Indonesia to Pardon Brazilian Sentenced do Death

Brazilian President Luiz Inácio Lula da Silva sent a letter asking the President of ...

Brazil President Says She Doesn’t Want Revenge, But She Won’t Forgive Her Torturers

Brazil’s Benoni de Arruda Albernaz, an army captain and the head of an interrogators ...