Federal government announces measures related to the economy

It is no mystery that the country's economy has been drastically declining due to the impacts of the COVID-19 pandemic on the national territory. In this sense, for the resumption of growth, a series of decisions is necessary aimed at the economic (re)establishment of specific sectors of Brazilian society. In view of this, starting this week, the federal government intends to launch a series of economic measures to boost the Brazilian economy.

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The measure, which was reported on March 1 by Economy Minister Paulo Guedes to investors in New York, emphasizes that foreigners who acquire public debt in Brazil will be entitled to tax exemption, something similar to what happens in the market domestic. However, the intention is to take advantage of the liquidity that until then still prevails in the international market, as the main banks of the main global economies raise interest rates as a result of the inflation.

Impact of the measure

The impact of this measure is forecast, taking into account the current estimate of flows and transactions, at R$ 150 million, updated. In fact, the expectation is that this flow will increase with the measure, however, a priori, there are no projections that encompass a different scenario. In this sense, the Ministry's technicians are working on the guidelines of the Fiscal Responsibility Law (LRF) seeking an alternative source of revenue.

The federal government, therefore, is betting on a “boom” of investments from North America and Western Europe, since the Russia is economically isolated, betting that Brazil is characterized as an equivalent country in matters of investment and resources. Currently, investments related to private debt in Brazil are taxed at 15%, while purchases of federal government bonds are tax-free.

Other measures

With regard to the domestic credit market, estimates point to articulated measures for companies aiming at revenues of R$ 300 million, out of a total of R$ 100 billion. In addition, the reopening of the National Support Program for Micro and Small Businesses (Pronamp) is expected to resume this week as well.

Another measure to be taken is the 25% reduction in the Tax on Industrialized Products (IPI). This initiative was carried out in a commitment with the Organization for Economic Cooperation and Development (OECD), with the aim of zeroing the rate of the Tax on Financial Operations (IOF).

Finally, in order to maintain a positive bias in the news regarding the climate of uncertainty due to the geopolitical conflicts of the 21st century — leading to taking into account the national inflation rate, too —, the government announced withdrawals in the amount of R$ 1 thousand from the Severance Indemnity Fund (FGTS). Such a measure to be announced aims to benefit 40 million people who are economically vulnerable in the country.

In partnership with the Ministry of the Environment, the Economy will also invest in measures with a “footprint green”, including financing of sustainable projects aimed at creating a market for credit credits carbon.

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