UPDATE 2-Brazil injects cash in state bank to boost lending

Thu Jan 22, 2009 2:23pm EST
(Adds Lula meeting with banks, total BNDES lending, adds byline)
By Fernando Exman
BRASILIA, Jan 22 (Reuters) - Brazil's government will increase funding at state development bank BNDES by 100 billion reais ($42.63 billion) in 2009 in a bid to spur corporate investment, Finance Minister Guido Mantega said on Thursday.
The move should help provide much needed cash for companies as private banks have reduced lending because of the global credit crunch.
"This is how we will confront the global economic crisis," Mantega said at a news conference. "The answer is to keep investment levels high."
The massive capital injection will help BNDES have a record 160 billion reais available for credit this year. The bank will support investment plans by energy giant Petrobras (PETR4.SA) in natural gas and oil exploration as well as by utility companies in electricity generation, Mantega said.
The government expects "zero fiscal impact" from the BNDES capital injection because the bank will have to pay back the funds to the treasury at some point in the future, Mantega said.
President Luiz Inacio Lula da Silva met on Thursday with executives from five state-run banks including Banco do Brasil (BBAS3.SA), BNDES and Caixa Economica Federal, urging them to speed up lending and reduce borrowing costs to prevent a sharp slowdown in the economy.