“Don’t confuse me with facts, just do it!”
There seems to be a bit of a problem with the announced credit expansion plan recently presented by the administration after meeting with the “Congress” of Economic Advisors (a.k.a. Conselhão or Big Council in English).
The public banks charged with disbursing the loans that, according to the administration, will get the economy moving again don’t have the necessary lending capacity under the current rules and regulations of the Central Bank (and the Basel Accord).
I suspect the administration will consider this to be a “mere detail”.
In 2007 the public banks (i.e. Banco do Brasil, BNDES, and Caixa Economica) accounted for 34% of banking sector loan disbursements. By 2015, this share had grown to 56%.
The banks are close to or at their prudent lending limits.
It might have helped if one of the 92 members of the “Congress” of Economic Advisors had suggested that prior to issuing any statement the government look at the financial statements of the institutions charged with carrying out the loan program.
The Brazilian Titanic remains at anchor and continues to take on water. It’s not gonna be easy to resume the course to Paradise!
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