Brazil unveils subsidized motorcycle credit program for app-based delivery drivers
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FILE PHOTO: A man pushes his motorcycle with a face mask depicting Brazil’s President of the Chamber of Deputies Hugo Motta attached during a protest for improved working conditions and against proposed legislation regulating app-based work, in Sao Paul
BRASILIA, June 12 (Reuters) - Brazil's government on Friday launched a subsidized credit program for app-based delivery drivers to purchase motorcycles, in a fresh move to boost demand and support a part of the workforce that has expanded rapidly in recent years.
The program will offer annual interest rates of 11.5% and 12.5% for female and male drivers, respectively, Planning Minister Bruno Moretti said during an event at the presidential palace in Brasilia.
The central bank's current benchmark interest rate is 14.5%.
Moretti said state-run lenders Caixa Economica Federal and Banco do Brasil will provide financing to eligible borrowers, noting that a government fund will mitigate credit risk by covering part of any potential losses.
The Ministry of Development, Industry and Trade said the value of new loans is expected to reach as much as 2.5 billion reais ($494.19 million).
The initiative is the latest in a series of quasi-fiscal measures introduced since the start of the year that do not directly affect the federal government's primary balance, but are aimed at boosting demand ahead of elections in October. President Luiz Inacio Lula da Silva, a leftist, is seeking a fourth non-consecutive term.
The measures being introduced include a broad program to renegotiate overdue consumer debt, as well as initiatives to encourage truck purchases and support vehicle financing for ride-hailing drivers.
The new program for app-based delivery drivers will target purchases of motorcycles manufactured in Brazil, including electric models, and will be available to drivers registered on platforms for at least six months and who have completed at least 100 trips or deliveries.
It will also cover cyclists, motorcycle couriers and taxi drivers formally employed for at least six months with the same company.
According to a government statement, borrowers will have a two-month grace period before repayments begin, with loan periods of up to 48 months.
ABOVE-TARGET INFLATION
Earlier on Friday, Finance Minister Dario Durigan also reiterated plans to launch later this month a government program to renegotiate personal loans and other types of consumer debt for Brazilians who are current on their payments.
Economists have warned that the various demand-boosting measures, combined with inflationary pressures stemming from the U.S.-backed war with Iran, have clouded the outlook for monetary policy easing in Brazil. The South American country's central bank had previously been expected to deliver much deeper rate cuts this year.
Annual inflation is also running at 4.72%, above the central bank's official 3% target.
BTG Pactual, which expects just one additional 25-basis-point rate cut next week followed by a pause for the rest of the year, estimated in a report this week that the previous stimulus measures rolled out by the Lula government would inject 142 billion reais into the economy this year, equivalent to about 1% of GDP.
($1 = 5.0588 reais)
(Reporting by Marcela Ayres and Bernardo Caram in Brasilia; Editing by Paul Simao)
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