Brazil’s government on Thursday said it would offer US$20 billion worth of special loans to stimulate the recession-stricken economy.
It will extend credit lines of up to 83 billion reais (US$20.4 billion) for farming, housing and infrastructure, and for small and medium-sized companies, Brazilian Minister of Finance Nelson Barbosa said.
The credit will be offered via public banks and other bodies “using existing resources in the best way possible” so as not to weigh on the public finances, he told a news conference.
“These credit lines don’t jeopardize the fight against inflation because they come from resources that are already in the financial system,” Barbosa said in Brasilia. “We have to restart economic growth, and this involves stabilizing credit.”
The minister also proposed setting a legal limit on government spending and creating ranges for future fiscal targets to allow for some fluctuations in tax revenue.
Brazil, the world’s seventh-largest economy, had a gloomy start to the year as it prepares to host the summer Olympic Games in August.
Official figures showed that 1.5 million jobs were destroyed last year.
The IMF said Brazil’s economy contracted 3.8 percent last year and is expected to shrink 3.5 percent this year.
A finance scandal that sparked impeachment proceedings against leftist Brazilian President Dilma Rousseff has aggravated the crisis.
Ratings agencies Fitch and Standard & Poor’s have downgraded Brazil’s credit score, saying Rousseff’s government has failed to clean up its public finances.
Rousseff said at an economic forum on Thursday that balancing the books was the challenge for this year.
“In 2015, we made a fiscal tightening unprecedented in our history,” she said.
“We know that there is still much to do,” she added, promising further cuts to public spending.
Rousseff said she also wanted to revive a controversial tax on financial transactions that was scrapped in 2007.
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