Brazil's President Temer announces measures to expand credit and create jobs

Brazil’s President Michel Temer announced a set of microeconomic policies in the late afternoon of Thursday (Dec. 15) to stimulate job creation, improve the business environment, and improve credit conditions for Brazilians. According to the president, growth, productivity and red-tape cuts will be instrumental in “calming down the country”.

The measures announced by the president include the creation of a tax settlement programme, credit incentives for buying real property, efforts to reduce credit card charges, and lower severance fines.

The measures aimed at “activating the economy,” in Temer's words, were planned by the government's economic advisors, and some of them are still in discussion.

Credit

The housing credit incentives according to Temer are a measure to create jobs. As for credit cards, according to the president, charge cuts would have “strong popular effect”. He did not give details as to how the government is planning to lower credit card interest, saying his economic team are still working on the proposal.

“One of the topics under discussion is allowing pricing differences between payment methods—eg. bank-issued barcoded invoice, credit or debit card—and working on a substantial reduction in credit card interest,” the president said. The measure, he said, is still being discussed by the Central Bank.

Taxes and burden

In explaining the tax settlement programme, the president noted that “there are many tax debtors with significant tax liabilities, and there are individuals owning taxes too. The programme would apply to both natural persons and corporations. The purpose, of course, would be to allow businesses and individuals to plan their payments over a period of time in instalments,” he said.

The government also plans to allow workers to use part of the funds from the FGTS (a compulsory worker savings fund to which employers pay regular contributions during employment) to pay off their debts.

Moreover, a mandatory additional severance fine of 10% on the FGTS may be gradually lowered. “We are planning to reduce this percentage to relieve the burden on businesses,” said the president.

According to Temer, the measures aim to increase the country's productivity and, as a consequence, combat unemployment. He cited macroeconomic measures that the government has adopted, including a constitution amendment that set a limit on government spending, and a social security reform submitted to the National Congress last week.

Translated by Amarílis Anchieta / Mayra Borges