Brazil’s government is moving closer to getting emergency financial support via credit guarantees to small-, medium- and micro-sized businesses, Economy Ministry officials said on Tuesday.
Productivity and Competition Secretary Carlos da Costa said credit will be available “soon”, while Deputy Economy Minister Marcelo Guaranys said the government is in talks with Congress over fine-tuning the executive decree on a credit scheme covering workers’ salaries to spur a greater take up.
Da Costa said the Treasury will pump 15.9 billion reais ($3 billion) into a credit guarantee fund, which will be managed by Banco do Brasil and support up to 85% of the loans taken by participating companies.
Much of the liquidity and loan guarantees offered up by the central bank in recent weeks has been taken by large companies, justifying these steps to help smaller firms navigate the crisis, he said.
Speaking separately in an online event hosted by consultancy KPMG, Guaranys said that the take-up among small firms for the government’s credit scheme to cover payroll has been low, so talks are underway with Congress on how to remedy that.
Central bank president Roberto Campos Neto said last week there will be tweaks made to the program, which has not had the “reach” he and his colleagues had expected.
Officials have said that companies are reluctant to take the credit because they would then be bound not to fire workers for a while. Given the current economic uncertainty and scale of the looming downturn, few are willing to make such assurances.