Political Risk Latin America Blog @PolRiskLatam

Brazil looks to boost private investment

Posted in News and Articles, Political Risk by politicalrisklatam on December 16, 2010

by Jonathan Wheatley for Financial Times – Beyond Brics, December 16th, 2010.

Brazil’s finance ministry has made the clearest sign yet that it’s serious about tackling the country’s fiscal imbalances: announcing a raft of measures to encourage more private investment.

If the measures work – and their impact will be felt only gradually – they will allow the private sector to take the strain off the public sector in financing infrastructure. Perhaps more important is a long-overdue recognition that such measures are needed at all.
Full details have yet to be announced but in the outlines are clear. Among other things the measures will:

1. end or reduce income tax on earnings from debentures (unsecured bonds) issued to fund infrastructure

2. end income tax for foreigners investing in bonds of more than four years duration issued by Brazilian non-financial companies

3. allow financial institutions in Brazil to spend part of their rerserve requirements (the share of their deposits they must part at the central bank) in the secondary market for corporate bonds, and cut taxes on earnings from the secondary market

4. allow the BNDES, the national development bank, to raise funding in the market for its non-priority activities (such as financing for mergers and acquisitions, working capital etc) (continue reading… )



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