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Brazil tries to cut red tape on USD 4.7 billion small business credit program

Small businesses form the backbone of Brazil's labor market. Photo: Kleber Cordeiro / Shutterstock.com
Small businesses form the backbone of Brazil’s labor market. Photo: Kleber Cordeiro / Shutterstock.com

The federal government issued a provisional decree on Monday facilitating access to credit for small and very small businesses. The bill, sent for congressional analysis, seeks to make use of BRL 23 billion (USD 4.7 billion) currently allocated in two unused federal funds. Lawmakers have up to 120 days to analyze and approve the decree, or it will expire.

The target of the program are Brazil’s small and very small businesses, which employ 62 percent of the Brazilian workforce and make up 27 percent of the country’s GDP. President Jair Bolsonaro has made multiple moves to cater to the business class, including a recent cut to manufactured goods taxes.

The credit program comes after the services sector posted a 0.2-percent monthly contraction in February. 

As was the case with the manufactured goods tax cut and another proposal to bump federal civil servant wages by 5 percent, the decree left several sectors feeling short changed — even those which the measure was designed to benefit. The retail segment deemed the BRL 23 billion total as “insufficient” to assure the sector will be able to regain its pre-pandemic standing. 

“As the amount initially discussed was BRL 100 billion (USD 20.5 billion), we believe small and very small businesses deserve more attention, especially while they are recovering from the disastrous effects of the pandemic,” wrote a chamber of commerce association. “The amount of money, below expectations, caused some frustration.”