Guedes wants to allow the use of FGTS funds to pay off debts with private banks.

BRASILIA (Reuters) - The government may release funds from the Severance Indemnity Fund (FGTS) in an attempt to boost economic growth by the end of the year, Economy Minister Paulo Guedes said on Tuesday.

Both the government of President Jair Bolsonaro and that of his predecessor, Michel Temer, implemented measures to release FGTS funds.

In a conference organized by the investment bank BTG Pactual, Guedes also stated that a credit program will soon be launched for companies "without a major fiscal impact," renewing what was already offered during the pandemic.

He further emphasized that the government intends to cut the Tax on Industrialized Products (IPI) by 25% to help local industry. He also added that a program to create 2 million jobs, similar to the simplified hiring plan called "Green and Yellow," is on the horizon. The government has already submitted proposals to this effect to Congress, but they expired before being approved.

"There are several initiatives we can have between now and the end of the year that should help the economy grow," Guedes stated.

"We can also mobilize resources from the FGTS (Brazilian Severance Indemnity Fund), because these are private funds, they are people who have resources there and are going through difficulties. Sometimes a person owes money to the bank and is a creditor in the fund. Why can't they withdraw from that account and settle their debt elsewhere?", he added.

He further stated that, from now on, inflation will fall and market projections for economic growth will be continually adjusted upwards.

Guedes also said that federal tax revenue grew 16% in real terms, adding that the result will be announced soon by the government, but without specifying which period it refers to.

The Brazilian Federal Revenue Service will release the January data in the coming days.

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