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Brazil government to announce economic stimulus package this week

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Brazilian President Jair Bolsonaro said on Wednesday that his administration will announce an economic stimulus package this week to revive flagging growth, confirming earlier media reports.

[BRASILIA] Brazilian President Jair Bolsonaro said on Wednesday that his administration will announce an economic stimulus package this week to revive flagging growth, confirming earlier media reports.

Earlier on Wednesday, newspaper Valor Economico reported Economy Minister Paulo Guedes as saying the government will free up 63 billion reais (S$22.7 billion), comprising 42 billion reais from the 'FGTS' workers' guarantee funds and 21 billion reais from a workers' social contribution fund.

"It is an injection, a small capital injection into the economy, right? And it is welcomed because the economy, according to experts, is starting to show positive signs, especially the ones coming from lawmakers," Mr Bolsonaro said during a summit of Mercosur nations in Santa Fe, Argentina.

Mr Bolsonaro's comments come days after the lower house of Congress approved the basic text of a landmark pension reform bill, seen as a critical step to restoring health to public finances and boosting investor, consumer and business confidence.

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The 63 billion reais package Mr Guedes flagged is much higher than previously touted. In late May, the government was looking at freeing up resources of around 20 billion reais from the FGTS funds, sources told Reuters.

The Economy Ministry did not comment on the minister's remarks to Valor Economico, saying there are no announcements scheduled.

The government last week halved its 2019 economic growth forecast to 0.8 per cent from 1.6 per cent, in line with the central bank's and broad market consensus outlook.

REUTERS