The government may appeal the liquidity line to banks to protect credit

To avoid what could be a credit crunch In the Brazilian economy, the federal government is considering resuming a Liquidity line to banks. The economic team is also studying the possibility of using Pronampe, a credit program targeting micro and small businesses in the country.

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Both measures have on the radar a sharp slowdown in credit, which could hurt economic activity in 2023 and even lead to a recession. The information was collected by state.

The risks come from the expectation of a high prime interest rate (Selic) for a prolonged period of time, as well as the gap announced by the Americana retailer. After the billionaire’s financial inconsistencies were revealed in the company’s accounting, one of the country’s main banks indicated that it would reduce the loan offer.

This week, the Finance Ministry’s executive secretary, Gabriele Gallipolo, hinted in an interview that the portfolio is considering creating “compensatory” measures to ensure liquidity. The Economics team focuses on expanding credit.

Crisis 2008

In 2008, an emergency liquidity line for banks copied from European countries was adopted in Brazil. Sources close to the government believe that the new measure should be similar to the one taken during the global financial crisis that year.

The line, which was later withdrawn from the market by the central bank, provides banks with liquidity by using a well-evaluated portfolio of fixed income loans as collateral. The institution offers this wallet as collateral and the BC issues a line of credit at a cost similar to the interbank discount rate (DI).

In addition to the two options under analysis, which are seen as complementary, the government is also studying other possibilities for the emergency programme.