By William Jones, Contributing Reporter
RIO DE JANEIRO, BRAZIL – The finance minister in Brazil, Guido Mantega, confirmed that the government is preparing a new stimulus package for the automotive industry as the sector continues to face job cuts and declining sales. The government’s special program will allow people to receive credit in order to buy a car in an effort to ramp up sales.
The repayment is spread over an average of 48 months and a guarantee fund will be created with the resources of independent financial institutions in order to cover possible defaults.
The fall of domestic sales and exports has caused car manufacturers to switch measures in order to adapt and avoid excess stock. Manufacturers could resort to shutdowns and job cuts. At a seminar in São Paulo Mantega said that the government is “allowing financing, which will be private, with some conditions.”
Mantega also revealed that measures to get the motor industry running again and protect jobs also include a stimulus to increase trade with Argentina. He stressed that the government is negotiating with the country to release barriers on car exports.
“Right now, it is difficult to export to Argentina which is our main automotive partner,” said Mantega. “There was a decline of exports to an important market and we are working to enable the increase in exports to Argentina,” he added.
The stimulus to an important sector of the Brazilian economy is also an effort to increase the country’s Gross Domestic Product (GDP), which is currently estimated to round out the year at 2.3 or 2.5 percent. The Brazilian government’s GDP projections indicate growth of three percent for 2015 and four percent in each of the next two years.
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