May 25, 2020 / 8:10 PM / a month ago

Brazil turns to multilateral lenders in coronavirus crisis

BRASILIA, May 25 (Reuters) - Brazil’s government hopes to borrow $4 billion from multilateral lending organizations to finance expenses related to the coronavirus crisis, including emergency supplementary payments and other social support programs.

According to an economy ministry document seen by Reuters on Monday, the funds would be used in part for an expansion of the Bolsa Familia conditional cash transfer program for low income families and to cover unemployment benefits for workers who have had their contracts suspended or work hours reduced.

At Monday’s exchange rate, the loans would correspond to approximately 21.9 billion reais.

Brazil will seek $1 billion each from the Inter-American Development Bank, the World Bank and the New Development Bank of the BRICS group of leading emerging economy nations.

Another $420 million would be requested from the German development bank KfW, $350 million from the Andean Development Corporation and $240 million from the French Development Agency.

Economy Minister Paulo Guedes and his team have opted to borrow instead of issuing bonds in the international markets because perception of risk on markets has increased and the cost has risen.

The economy ministry did not immediately respond to requests for comment on Monday.

Last week, Treasury Secretary Mansueto Almeida said Brazil had no problem financing itself on the domestic market with short-term debt, but the premium for bonds maturing in three years or more was very high. (Reporting by Marcela Ayres Writing by Anthony Boadle; Editing by Tom Brown)

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