SAO PAULO, March 15 The Brazilian government is
preparing a replacement for the benchmark interest rate that
state development bank BNDES uses to peg long-term
corporate loans, the latest step toward reducing costly
subsidies, newspaper Valor Econômico said on Wednesday.
Senior policymakers will meet on Tuesday to discuss the
matter, although there is no deadline to present President
Michel Temer with a formal draft, Valor said, without saying how
it got the information.
BNDES, the largest source of long-term corporate loans in
Brazil, uses the TJLP rate as a benchmark for
subsidized loans. Under the current system, BNDES charges the
TJLP plus a spread for most disbursements of corporate loans.
For decades, the TJLP rate has run below the benchmark
overnight lending rate, partly because of an effort by
politicians to boost growth and create jobs. However, the
implicit subsidy in these loans cost taxpayers an average 1.5
percent of gross domestic product in each of the past couple of
The decision to replace the benchmark is the latest step by
the Temer administration to reverse decades of subsidies that
have cost taxpayers trillions of reais without a significant
effect on long-term growth.
The new system would create a substitute rate that pegs
loans to long-term yields on government inflation-linked debt,
Valor said. While the TJLP is calculated on a quarterly basis,
the new rate benchmark will be set monthly, the paper added.
Under the plan, the TJLP rate will be phased out as loan
contracts expire, Valor said.
The central bank and the finance ministry did not have
(Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn)