Credit returning to normal in Brazil-cenbank

Sat Jan 31, 2009 12:27pm EST
By Nichola Groom
DAVOS, Switzerland (Reuters) - Credit conditions will return to normal in Brazil within two months due to government efforts to unlock lending, Central Bank President Henrique Meirelles said on Saturday.
"Fortunately Brazil is one of the few emerging and developing countries which has the resources to replace the international credit," Meirelles told Reuters at the annual meeting of the World Economic Forum in Davos, Switzerland.
"We would expect that the total supply of credit, domestic and external, be normalized within 30 to 60 days."
Domestic credit supplies had already returned to pre-crisis levels, Meirelles said. This month, Brazil said it would set aside some $20 billion of its international reserves for more than 4,000 domestic companies with foreign debt maturing from September 2008, when the global economic crisis deepened, until the end of 2009.
The bank's strategy made up for the decline in supply of foreign credit to Brazilian companies, eventually lowering financing costs in the domestic market as well.
Brazil has more than $200 billion in foreign reserves.
Before the credit crisis took its toll on emerging markets, Brazilian companies were rolling over all of their foreign debt as well as taking on additional loans abroad.
Also on Saturday, Meirelles said he expected Brazilian economic growth to be above the world average in 2009.
"Most of the forecasts I have seen project Brazil growing 1 percent higher than the world average," Meirelles said in an interview at the annual meeting of the World Economic Forum.
Earlier this week, the International Monetary Fund slashed its 2009 growth forecast for the world economy to 0.5 percent. Brazil, in December, said its economy would grow 4 percent in 2009 but Meirelles would not comment specifically on that target.
(Editing by Mike Peacock)