BRASILIA, Jan 21 (Reuters) - President Dilma Rousseff’s government will announce a strategy next week to kick start the Brazilian economy without causing it to overheat or fuel inflation, sources in the administration said on Thursday.
The attempt to pull Brazil out of its worst recession in decades will involve opening up state financing for certain industries, infrastructure projects and smaller exporters to save jobs.
But unlike the generous across-the-board credit policies that weighed heavily on Brazil’s fiscal accounts during Rousseff’s first term, the new strategy will not involve subsidized loans and will be directed at very specific sectors.
“Heating up the economy and fighting inflation can be contradictory. The government needs a strategy to reconcile the two things,” said a source in the Planalto presidential palace.
The plan will be unveiled by Finance Minister Nelson Barbosa Jan. 28 during a meeting of a revived Economic and Social Development Council, an advisory body that brings together businessmen and labor leaders, government officials and civil society representatives, presidential aides said.
Barbosa replaced fiscal conservative Joaquim Levy in December and is tasked with difficult job of restoring growth while maintaining spending austerity to bridge a gaping deficit and rein in inflation.
Top priorities will be private infrastructure concessions to upgrade ports and airports and build roads and railways, and stimulus to small and medium companies and exports.
To help companies enter the export market, the plan is to set up a fund with money from the National Development Bank BNDES to be loaned with long-term interest rates so they can get started, buy raw materials and start producing until they start bringing in export revenues, a trade policy source said. (Reporting by Anthony Boadle; Editing by Lisa Shumaker)