June 8, 2020 / 2:17 PM / a month ago

Brazil's BNDES suspends debt payments owed by state, local governments

FILE PHOTO: A sign at the main entrance of the Brazilian National Development Bank (BNDES) building is seen in Rio de Janeiro, Brazil January 8, 2019. REUTERS/Sergio Moraes

RIO DE JANEIRO (Reuters) - Brazilian development bank BNDES has suspended the payment of interest and principal on debt owed by municipalities and states through the end of the year, Chief Executive Gustavo Montezano said on Monday, citing the coronavirus pandemic.

Speaking in Rio de Janeiro, Montezano said this could save states hit by the pandemic up to 3.9 billion reais ($790 million), and added that the bank may also make emergency transfers of 456 million reais to 13 states.

The CEO added that BNDES, responsible for the bailouts for the largest companies affected by the crisis, has created a 2 billion-real credit line for healthcare companies.

A bailout for the airlines will probably be disbursed only in July, Montezano said. He said the bank is discussing potential credit for subsidiaries of international carmakers, and that talks on bailouts to power companies are underway.

The CEO said the bank has decided the country’s largest retailers do not need emergency aid from state banks.

Reporting by Rodrigo Viga Gaier; Writing by Tatiana Bautzer; Editing by Jonathan Oatis

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