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To try to alleviate the economic crisis caused by the covid-19 pandemic, the Brazilian government announced a series of measures that should introduce almost BRL 150 billion in three months. Part of the actions aim to make more money available to people, such as an advance on the INSS [social security national institution] year-end bonus. Other measures were taken to prevent companies from closing or firing employees, which would aggravate the situation.
Check out what has already been announced and what is on the agenda to combat the effects of coronavirus on the Brazilian economy.
Year-end bonus advance
The government will be giving INSS [social security national institute] advances to retirees and pensioners. The advance on the first installment has already been announced last Thursday (12) - this payment would normally begin in August. On Monday (16), minister of economy Paulo Guedes stated that the second part will also be given in advance, so that all beneficiaries will receive both installments by May (check the payment schedule here).
The ministry predicts that the measure will put BRL 46 billion in circulation in the coming months. The measure depends on a presidential decree that has yet to be made official.
Salary bonus advance
Another announcement stated that the PIS/Pasep salary bonus for June will also be made in advance, which also depends on the publication of a presidential decree. The measure aims to introduce BRL 12.8 billion into the Brazilian economy in the first semester.
More money for Bolsa Família [family stipend]
This Monday, the government stated that it will allocate another BRL 3.1 billion to Bolsa Família. The funds are expected to include 1 million beneficiaries in the program.
Proof of life is suspended and examination is waived
This Tuesday (17) the INSS published an ordinance that suspends the beneficiaries' proof of life for 120 days, starting in March. This means that retirees and pensioners will continue to receive benefits without having to go through the procedure to prove they are alive. The goal is to avoid spreading the disease.
The INSS also studies to facilitate granting sick pay to Pension policyholders diagnosed with covid-19. Most likely, they will be exempt from medical examination.
Changes in payroll loans
The government is considering lowering the payroll loan interest ceiling for retirees and pensioners. Since September 2017, the maximum rate has been 2.08% per month. According to data from the Central Bank, banks currently charge an average rate of 1.8% per month.
According to the special secretary of Social Security and Labor, Bruno Bianco, the issue should be dealt with in the Conselho Nacional de Previdência [National pension council] meeting scheduled for this Tuesday (17th).
On another front, a proposal must be sent to Congress to expand the salary margin that can be dedicated to the financing portion. Today, this margin is 30% for loans and 5% for credit cards. The payment term is also expected to increase, but the department did not detail the new parameters.
More withdrawals from the FGTS - (Fundo de Garantia por Tempo de Serviço) [Guarantee fund for length of service]
According to minister Paulo Guedes, the government will "examine" the release of more withdrawals from the FGTS (Fundo de Garantia por Tempo de Serviço) [Guarantee fund for length of service] The statement came after press consultancy of the Ministry of Economy.
Last year, to stimulate the economy, the government also allowed the immediate withdrawal of up to one minimum salary for each FGTS account, in addition to inaugurating the birthday withdrawal modality.
The economic team also evaluates authorizing workers to use FGTS resources as collateral to take out loans. The update would reduce the interest charged by banks.
On Monday, the Ministry of Economy announced that amounts not withdrawn from PIS/Pasep will be transferred to FGTS to allow new withdrawals. With this relocation, the government expects to release BRL 21.5 billion.
Deferred charges for companies
To prevent companies from closing or firing employees in the midst of the crisis, the government will give a longer term for some charges:
Suspending FGTS payments depends on approval of the bill by the National Congress or issuing a MP (Provisional Measure). The payment term has not yet been defined and may be longer than 12 months.
In the case of the Simplified Taxation System, a resolution by the management council is sufficient for the measure to take effect. Companies will have to pay the tax due by the end of 2020.
Discount on S System
For three months, companies will have a 50% reduction in contributions from S System (set of institutions of interest to professional categories, such as Sesc, Sesi, Senac and Senai). The government estimates that this will give companies a total breath of BRL 2.2 billion.
Credit for micro and small companies
The government should release about BRL 5 billion from the Workers' Aid Fund in the form of credit for micro and small companies.
On Monday, the Conselho Monetário Nacional [National monetary council] (CMN) approved two measures at an extraordinary meeting to facilitate debt renegotiation.
postponing FGTS payments for three months by companies (BRL 30 billion) postponing the Union's share in the Simplified Taxation System payment for three months (BRL 22.2 billion)
The first is aimed at companies and families considered to be good payers, with the objective of allowing adjustments in cash flow. It is estimated that approximately BRL 3.2 trillion in credits will meet the criteria.
In another measure, the government increased the capital gap of the national financial system by BRL 56 billion, which allows the credit capacity to be increased by BRL 637 billion. According to the BC, the measure expands banks' ability to use capital so that they are better able to negotiate and offer loans.
Shortly after the BC's announcement, Federação Brasileira de Bancos [Brazilian federation of banks] (Febraban) released a note stating that the five largest Brazilian banks will accept to extend the maturity of debts for families and for micro and small companies by 60 days, as long as payments are up to date.
The government also announced on Monday the waiver of documentation (CND) for credit renegotiation and facilitating the clearance of imported industrial raw materials before landing.
Emergency health grants
The federal government issued Provisional Measure 924/2020, which brings BRL 5.09 billion from the ministries of Health and Education to face the emergency public health crisis caused by the new coronavirus.
The MP was published on Friday (13). Of the total, BRL 4.81 billion will go to Fundo Nacional de Saúde [National health fund], BRL 20 million to Fundação Oswaldo Cruz [Fpundation], BRL 204 million to Empresa Brasileira de Serviços Hospitalares [Brazilian hospital services company] and BRL 57 million to Hospital de Clínicas de Porto Alegre [health clinic]
On Monday, the government stated that it will allocate BRL 4.5 billion of the balance of the Dpvat fund to SUS (Sistema Único de Saúde) [Unified health system]
Less tax for medical products
The government has said it will remove the import taxes on medical products until the end of the year to help fight the coronavirus.
In conjunction with the Ministry of Health, the government must elaborate a list of imported medical and hospital products that will have a preference in reducing taxes and customs clearance to ensure supply.
The arrival of covid-19 in Brazil has already driven up the price of items such as hand sanitizer and surgical masks.
Caixa's president, Pedro Guimarães, said that the public bank will operate in three sectors, with BRL 75 billion to help fight the coronavirus economic crisis. Of this total, BRL 30 billion can be used to buy payroll and automobiles loans from medium-sized banks that present any difficulty.
Guimarães stated that Caixa will offer BRL 40 billion in working capital lines to small and medium-sized companies, in addition to real estate firms. Another BRL billion will be offered in agricultural credit.
Assistance for airlines
Abear (Associação Brasileira das Empresas Aéreas) [Brazilian association of airline companies] stated that the federal government is studying the issue of an MP (Provisional Measure) to help companies in the sector, strongly affected by the coronavirus pandemic.
President Jair Bolsonaro (non-partisan) confirmed that there is an intention to help the sector. "Let´s help these companies, which are losing customers, are we going to let them collapse or are we going to present an alternative? In my opinion, collapse is the worst alternative that exists", said Bolsonaro in an interview with Bandeirantes radio.