SAO PAULO, Oct 2 (Reuters) - Loan requests and disbursements at Brazil’s state development bank BNDES slumped in the first eight months, signaling a dramatic drop in capital spending plans as Latin America’s No. 1 economy reels from the steepest recession in a quarter century.
Companies requested 49 percent less loans between January and August this year from the year-earlier period, while disbursements tumbled 25 percent to about 85 billion reais ($21 billion) in the period, BNDES said in a statement on Friday.
BNDES, long considered as the main source of long-term corporate lending in Brazil, targets total disbursements of 170 billion reais this year.
About 45 percent less loans were approved in the first half of 2015 from a year earlier, suggesting the Rio de Janeiro-based lender is implementing stricter criteria for credit allocation.
The sharp declines in all credit indicators suggest that companies are paring back or delaying investment plans as the economy contracts. For decades, Brazilian companies large and small have been hooked on cheap credit from BNDES.
BNDES is gradually slowing lending as part of efforts by President Dilma Rousseff to narrow a mounting budget deficit and the crowding-out of banks and debt markets from credit markets.
BNDES’ balance sheet grew at a record pace during Rousseff’s first term, which started in January 2011 and ended last December, and credit rating firms have urged her to downsize it as a condition to maintain the nation’s investment-grade status.
$1 = 4.0397 Brazilian reais Reporting by Guillermo Parra-Bernal Editing by W Simon