FEDERAL GOVERNMENT ANNOUNCES CREDIT TO FINANCE SALARY PAY

Earlier today, March 27, the president of the Brazilian Central Bank announced an emergency line of credit of 40 billion reais, to assist small and medium size companies with annual invoicing ranging from 360,000 reais to 10,000,000 reais.

This measure is issued with the specific purpose of paying the salaries of the employees of these companies for a period of two months. Intent of the measure is to reduce the number of terminations, as well as mitigate potential salary reductions during the pandemic.

As per today’s governmental announcement, the payment will be credited directly in the employees bank account through payroll, up to the limit off to monthly national salaries, currently corresponding to 2,090 reais. Companies will have to complement the employees’ pay in case the monthly salary exceeds this limit. In return to the credit granted, companies will not be able to terminate its employees during the 2 months of the public financing. Term for payment will be of 30 months, with a grace period of 6 months and an interest rate of 3.75% a year.

The actual grant of this incentive and its start date still depend on an executive order to be issued by the federal government, determining the opening of this line of credit and the creation of a fund to be operationalized by BNDES, supervised by the Central Bank and with resources from the National Treasury. The government also informed today that it is studying other lines of credits for companies. We remain available to discuss about this new measure in detail with those companies that want to further explore it.