Hoping to rein in a widening current account deficit, Brazil’s government Wednesday announced the creation of a national export-import bank and unveiled a long-awaited list of incentives aimed at boosting the country’s exports.

Speaking at the announcement of the measures, Brazilian Finance Minister Guido Mantega said they would help overcome recent dissappointing trade balances by improving conditions for local industries.

“There is an international crisis abroad that has heightened competition,” said Finance Minister Guido Mantega. “We need to constantly take measures so that Brazilian production is increasingly competitive.”

Brazil posted a 12-month current account deficit through the end of March of $31.51 billion, or the equivalent of 1.79% of GDP.

Brazil’s current account balance has deteriorated under the impact of an international financial crisis and sluggish foreign trade to a deficit from a slight surplus seen at the end of 2007.

Mantega said the Export-Import bank, or Exim Bank, would be created on the foundation of the Finame industrial financing agency at the country’s BNDES National Development Bank.

Speaking at the announcement, BNDES President Luciano Coutinho the new institution would offer longer-term financing for local export industries that was not easily available elsewhere in the market.

In addition to the creation of the Exim Bank, the government Wednesday said it would create an export insurance company and a BRL2 billion foreign trade guarantee fund.

It will also create a BRL7 billion credit line for equalization of interest rates on pre-export production. The financing will be available over a period of 36 months and can be taken at 7% interest through June 30 and at 8% interest from June 30 to Dec. 31.

Alongside those measures, the government said it would expedite the return of 50% of export credit against PIS and COFINS welfare taxes and the IPI industrial products tax.

To be eligible, however, companies must obtain 30% of revenues from exports and have participated in export markets for at least four years.

Further, the government said it would broaden incentives on drawback exports, allowing companies to tax exemptions on nationally made input materials that can be documented after exports are made.

As a measure to correct imbalances in auto-parts trade, the government Wednesday said in six months it would eliminate a 40%-tax reduction offered on auto-parts imports.

And as an additional measure to help siphon off excess local production, the government said it would implement a policy of offering preference for nationally produced goods and services in government procurements, as long as they were offered at a price within 25% of competing foreign offers.

Source

Bookmark It

Related posts:

1. Ex-Im Bank announcement coming in 2 weeks – finance minister
2. Brazil Current Account Deficit Widens to $5.1 Billion
3. Government opens US$3.46bn capital injection for CEF
4. CEO: Standard Chartered’s bank license about client footprint, not BCB crackdown
5. Brazil Needs to Wean Itself From State Bank Loans, Levy Says