Brazil issues $352 million in new payroll loans under revamped rules

BRASILIA (Reuters) - Brazil's presidential chief of staff said on Wednesday that 2 billion reais ($352.02 million) in new payroll-deductible loans for private-sector workers have already been issued following new government rules aimed at expanding this type of credit.

Speaking in a radio interview, Rui Costa said the government had a review meeting on Tuesday with state-run lenders Banco do Brasil and Caixa Economica Federal, which have already issued more than 1.2 million loans under the scheme.

Their interest rates range from 1.5% to 3% per month, he added.

That compares with an average monthly rate of 5.9% for non-payroll-deductible personal loans, according to the latest central bank data.

New rules for payroll-deductible loans for private-sector workers were unveiled last month amid President Luiz Inacio Lula da Silva's efforts to stem a sharp decline in his approval ratings.

The market is closely monitoring the pace of loan issuance amid concerns that it could contribute to overheating the economy, running counter to the central bank's efforts to cool it down through an aggressive interest rate-hike cycle.

Central bank director Nilton David said on Monday that policymakers have yet to reach a firm conclusion on the impact of the changes. He noted that one possibility is borrowers refinancing expensive debt with cheaper credit, while another is taking on new debt.

($1 = 5.6815 reais)

(Reporting by Marcela Ayres; editing by Gabriel Araujo)

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