(New throughout, adds details, background, comments)
By Marcela Ayres
BRASILIA, March 13 (Reuters) - Brazil will announce steps to fight the coronavirus in the coming days at a time the economy is in deeper trouble than previously thought, Economy Minister Paulo Guedes said on Friday.
Guedes said the country’s public health response to the outbreak will not damage its fiscal position and added that the central bank chief has assured him the financial system can weather the coronavirus crisis.
“A lot of anti-coronavirus measures will be announced between now and Monday. We are acting in 48 hours,” he told reporters, adding that the health crisis should dissipate in five to six months if the government takes the proper steps.
Guedes told reporters in Brasilia the country’s economy is essentially stagnating. But he said he spoke with central bank president Roberto Campos Neto who assured him that the financial system is safe after a historically volatile week for markets.
“He assured me that liquidity conditions are absolutely stable and will guarantee this stability in the market by providing liquidity,” Guedes said.
“He will soon announce measures to guarantee liquidity. He told me Brazilian banks are absolutely liquid, they are very comfortable,” Guedes added.
Guedes said Brazil should use the coronavirus crisis as an opportunity to accelerate the government’s economic reform plans, which include reducing the budget deficit and size of the public sector, simplifying the tax system, and ramping up privatizations.
With global markets volatile this week as coronavirus fears mushroomed, Brazilian stocks had their biggest fall since 1998 and the real cratered below the historic 5.00 per dollar mark for the first time ever.
Guedes said that authorities are monitoring small and medium-sized banks, but denied that any are in trouble.
Some 135 billion reais ($29 billion) of reduced reserve requirements for banks, announced by the central bank last month, centers into circulation today, according to Guedes, adding that this will provide a cushion for the economy.
Guedes also repeated his mantra that Brazil must press ahead with the government’s economic reform agenda, which he called the only platform for sustainable, long-term investment and growth. (Reporting by Marcela Ayres Writing by Jamie McGeever Editing by Chizu Nomiyama and David Gregorio)