Brazil Hopes FGTS Fund Will Inject R$30 Billion into Economy

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – A recent measure adopted by the Brazilian government to allow nearly 30.2 million workers to withdraw the amounts deposited in inactive workers’ fund (FGTS) is expected to inject R$30 billion into the Brazilian economy by the second semester of 2017.

According to state controlled bank, Caixa Econômica Federal, there are 49.6 million inactive accounts with balances totaling R$43.6 billion.

“We had 3.8 percent GDP drop in 2015. Unemployment has reached high levels, and the government now has, with these measures, showed compassion … with these people,”aid the acting Planning Minister Dyogo Oliveira, on Tuesday when the government announced the calendar for the disbursement of the funds.

Adding, “Now these workers will begin to have access to these resources. They can not only pay off their debts, but also re-consume and boost the Brazilian economy.”

The government hopes that these billions will speed up Brazil’s economic recovery, which is expected to grow less than 0.5 percent this year. Analysts have been flooding local media outlets to suggest that bills be paid first and then investments made with the money obtained from the funds.

Those Brazilians who live abroad and have a savings account with Caixa Economica will have the value of their FGTS deposited directly into their account. For those who don’t they will have to appear at their area Brazilian consulate or embassy with the necessary documents to retrieve their funds.

According to government estimates, approximately 95 percent of inactive accounts have balance of up to R$3,000 while five percent have higher values. According to the calendar released this week by the government, resources will start to be available on March 10th, according to workers’ birthdates.

Each month a group will be allowed to withdraw their FGTS funds. The withdrawal process closes on July 31st for all of the over thirty million workers with funds in the FGTS.