Brazil Meirelles sees trade finance easing

Brazilian Central Bank President Henrique Meirelles said lenders are rolling over more maturing trade loans, indicating growing foreign exchange inflows into the country, a local newspaper reported on Tuesday. Meirelles, speaking to farming executives in the city of Goiania in Brazil's Midwest on Monday, said banks are now refinancing over 75 percent of maturing trade finance, compared with an average 22 percent at the height of the credit crisis, O Estado de S. Paulo reported.
The so-called rollover rate is a gauge of inflows of foreign exchange into the country. Meirelles said increased trade refinancing will require the central bank to keep buying foreign exchange in the local currency markets, Estado said. "Brazil is one of the first countries replenishing its coffers after the crisis," Meirelles was quoted as saying by Estado.
The nation's international reserves reached $208.8 billion at the end of last week, near the all-time high of $209.2 billion reached December 17, 2008. Recent government measures such as the creation of a credit guarantee fund and the reduction of compulsory reserves for the banking system have fuelled a jump in loan concessions for individuals and small- and medium-sized companies, Estado quoted Meirelles as saying.
TRIMMING TAX ON PAYROLL: The Brazilian government is considering trimming a 20 percent tax on payrolls to encourage hiring and make companies more competitive, newspaper Folha de Sao Paulo reported on Tuesday.
The tax reduction might be between two and three percentage points, Folha said, without saying how it obtained the information. Revenue losses stemming from the reduction in the tax, which is used to fund social security, are estimated at 11.6 billion reais ($5.9 billion), Folha said. Government officials are at odds over the measure, saying it is hard to weigh the benefits while fiscal costs might be high, the report said.
Cabinet ministers are concerned the proposal may spark demands by lawmakers to extend concessions to pensioners, inflating the social security deficit, Folha said. Finance Ministry officials were not immediately available for comment on the story.