Underlying the battle in the Congress this week over the increase in the minimum wage — the opposition leader in the Senate, Aécio Neves, has just announced he supports the lower rise, silencing loud noises from the former presidential candidate of his party as well as disappointing the major trade union conferderations — is a project to cut the federal budget this year while maintaining development subsidies.
The local press, except for the leftist Carta Maior — the editoriographic above is from the cheerfully pelego DComércio — makes no mention of this linkage, but the factoid of the hour is that each additional real committed to the wage adjustment is R$15 billion unavailable for social and economic development programs.
As at home, the tactic of the opposition is Starve the Beast, as we saw in the purely symbolic defeat of a meaningless tax o financial transactions, the CPMF, that was simply made up for with the increase of the IOF.
With the deal now closed at the lower wage increase, the Estadao is able to report that
… the Caixa Econômica Federal and the National Social and Economic Development Bank (BNDES) will have an additional R$ 130 billion in capital for loans this year . The Caixa will receive R$ 2.2 in Petrobrás and Eletrobras, raise to some R$ 30 billion its loan reserve; BNDES will get an additional R$ 6.4 billion, raising its loan capacity to R$ 100 billion.
With the increase in assets, the Caixa’s Basel Index will rise from 15.4% to 16.0% or so, but should settle at about 15% by year’s end due to a 30% increase in loan volume planned for this year.
A VP of the CEF says …
the additional capital will sustain the bank’s planned lending until 2014, with expansion in lending constant at 30% per year..
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