SAO PAULO, March 16 The Brazilian government is
considering pegging borrowing costs on farming loans to the
benchmark overnight Selic interest rate in another step toward
reducing costly credit subsidies, newspaper Valor Econômico said
According to Valor, which did not say how it obtained the
information, policymakers would fix at 85 percent the weight of
the Selic on interest charged on farming loans. Several types of
farming credit bear a 50 percent to 70 percent Selic component,
the newspaper said.
The changes will only take place if the Selic goes down
below an annual 10.5 percent and the cost of earmarked credit
for farmers falls by at least 1 percentage point in coming
months, Valor reported. Earmarked credit is a modality of
lending in which commercial banks must make loans to sectors the
government deems strategic.
The Finance Ministry did not immediately answer calls for
The Selic is at 12.25 percent, above an all-time low of 7.25
percent set between October 2012 and April 2013.
Still, a weekly central bank survey of more than 100
economists shows expectations that policymakers could accelerate
the pace of cuts at their next meeting in April and drive rates
down to an average 8.75 percent by the end of next year.
The move may be the latest step by President Michel Temer's
administration to reverse decades of subsidies that have cost
taxpayers trillions of reais without a significant effect on
(Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn)