Government announces further measures to stimulate the credit market.

Reuters The government announced new measures to try to stimulate the credit market in Brazil, which involve simplifying operations aimed at the real estate sector and launching guaranteed real estate bonds, which will be exempt from income tax.

Finance Minister Guido Mantega also announced that borrowers of loans for movable goods can request repossession of the goods with less bureaucracy in case of default, in order to reduce the costs of the operation. According to Mantega, these actions will reduce the costs for financial institutions.

(Reporting by Luciana Otoni; Text by Patrícia Duarte)

Stimulating credit will not increase inflation, says Mantega.

Pedro Peduzzi and Wellton Máximo - Reporters for Agência Brasil 

The measures announced today (20) by the Ministry of Finance and the Central Bank could only be adopted thanks to an improved scenario in the Brazilian economy, according to an opinion expressed by Minister Guido Mantega during the announcement of the measures adopted by his ministry. According to him, despite stimulating credit, the measures should not increase inflation in the country.

"The Central Bank has been very successful. Inflation is under control, and food prices are falling. That's why it [the Central Bank] decided to gradually inject capital into the economy, with measures that will also gradually improve credit," said Mantega. According to him, the country's economy "is solid" and not stagnating as some critics say.

"It is precisely because inflation is absolutely under control that we are taking these easing measures, in order to inject credit into some sectors of the economy," said the minister. "The World Cup was good, despite resulting in fewer working days for the country during the games. The exchange rate is stable; the flow of foreign capital is positive and generating interest abroad. Furthermore, inflation last month was close to zero, after falling for the last four months," he argued.

According to him, household debt has been falling in recent months, as has default. Families are able to do so, with families working and seeing their total wages growing.

Mantega added that the measures adopted by the government are mostly regulatory in scope and are part of a set of efforts aimed at improving the regulatory framework. "The trend," he said, "is to reduce costs for consumers and businesses, creating conditions for a reduction in the spread [difference between the rate banks pay depositors and the rate charged on loans]. But this is a decision for the market, which is free. What we can do is create conditions for these costs to decrease. We have only provided the favorable conditions for this reduction."

He denies that such measures were taken for electoral reasons. "Our pace is not political. We have a flow of measures that mature until they come into effect. Even during or after elections. It is a permanent flow of measures to improve the regulatory framework," he justified.

The announced measures will take effect upon publication of two provisional measures, which, according to the ministry, should happen by next week. Some of them still depend on a resolution from the National Monetary Council.