Government announces R$ 40 billion in credit line to guarantee jobs

Press conference with the President of the Republic Jair Bolsonaro, President of the Central Bank, the President of Caixa and the President of BNDES

The federal government announced on Friday (March 27) an emergency line of credit at reduced interest rates for small and medium-sized companies worth R$ 40 billion. The aim of the measure is to finance the payroll of these companies and guarantee jobs.  Through the initiative, the government will pay the salaries of employees who earn up to two minimum wages (R$ 2,090) for two months.

The announcement was made by the President of the Republic, Jair Bolsonaro, and the presidents of the Central Bank, Roberto Campos Neto; the president of Caixa Econômica, Pedro Guimarães; and of the National Bank of Economic and Social Development (BNDES), Gustavo Montezano.

During the announcement, President Bolsonaro stressed the government's concern to protect the population and attend to the victims of the coronavirus and to keep jobs threatened due to the difficulties faced by the Covid-19 pandemic.

During this period, the company that accepts the funding will not be able to fire its workers. The credit line provides interest of 3.75% per year, with zero bank spread, that is, there will be no profit for the banks in this operation. There will also be a six-month grace period for companies to begin repaying the loan, which can be paid in installments of up to 36 months.

The measure will benefit, throughout the country, more than 12 million workers and 1.4 million small and medium-sized companies with annual revenues of R$ 360,000 to R$ 10 million per year. New measures to benefit informal workers and micro enterprises are also under study by the government.

The president of the Central Bank, Roberto Campos Neto, emphasized that the focus of the package was on small and medium enterprises because they are the ones that needed immediate help, since they find it more difficult to take out loans in the banking sector, unlike the big ones. Campos Neto also emphasized that this public never had access to such a low interest rate in Brazil.

Of the total resources of the program, 85% come from the National Treasury (R$ 34 billion) and 15% from private banks. The financing will be operated by the banks with which the entrepreneurs already have a relationship. Salary payments, on the other hand, will be directed directly to workers' accounts and will be linked to employees' social security (CPF). Employers will be able to supplement employees with higher salaries.

In this sense, the president of Caixa, Pedro Guimarães, highlighted that the package was designed in a responsible way, in order to ensure the financial balance of the state-owned company. According to him, the announced measures are an example that it is possible to use the National Treasury to support 85% of the resources allocated to potential borrowers.

New credit lines

The government will also make available, via Caixa Econômica Federal, a R$ 5 billion financing line for the Santa Casas - which are non-profit medical entities - from all over the country at a rate of 10% per year. Until then, this rate was 20%. Old contracts will also be revised.

Another line of credit was granted from BNDES resources for health companies, in the amount of up to R$2 billion. The interest applied will be 10% per year. The president of BNDES, Gustavo Montezano, added that new measures will be announced by the bank in the next few days focusing mainly on air and ground passenger transportation companies.

The Caixa Econômica also announced a new reduction in interest rates and increased payment terms. Interest on special and revolving credit card cheques was set at 2.9 percent per month. Another measure adopted by Caixa is the postponement, for three months, of the payment of the installments of those who have real estate financing, benefiting 800 thousand families.