UPDATE 3-Brazil unveils $15 bln housing plan to boost growth

Wed Mar 25, 2009 3:55pm EDT
By Ana Nicolaci da Costa
BRASILIA, March 25 (Reuters) - Brazil's government unveiled an ambitious $15 billion housing plan on Wednesday for low-income families, President Luiz Inacio Lula da Silva's latest bid to create jobs and prevent Latin America's largest economy from falling into recession.
The plan aims to build 1 million homes by 2011 and jump-start Brazil's economy, which has been hit hard in recent months by the global downturn, forcing a wide array of industries to scale back investments and lay off tens of thousands of workers.
The government expects the housing plan, which will cost 34 billion reais ($15.13 billion), to create 700,000 jobs nationwide as construction companies increase hiring. Finance Minister Guido Mantega said it could generate as many as 1.5 million new jobs, citing a study by the Getulio Vargas Foundation.
The program looks set to help reverse a recent spike in unemployment that has started to gnaw away at the Lula administration's once sky-high approval ratings.The plan was unveiled with great fanfare by Lula's chief of staff Dilma Rousseff, a rising star in the ruling Workers' Party and the president's apparent choice to succeed him in next year's presidential race.
"(The program) significantly increases the access of low income families to their own houses. At the same time, it generates jobs and income through increased investment in construction," Rousseff said at a ceremony in Brasilia, with a beaming Lula in the audience.
The funds for the plan will come from the government's budget and the federally backed FGTS retirement fund. It will offer subsidized loans for low- and middle-income families seeking affordable mortgages, which have long been elusive to the majority of Brazilians.
Lula, a former metalworker and union boss who has overseen Brazil's biggest economic boom in decades, called the housing plan an "emergency response" to the global economic crisis.
Brazil's government has provided tax breaks and increased credit lines to downtrodden industries to cope with the global financial crisis. But until now, it had stopped short of embracing the sort of stimulus packages being launched by major economies elsewhere in the world.
"There is no doubt this is a bold program and of great impact on the Brazilian economy. For sure it will be one of the main anti-crisis programs this government will launch," Mantega said at the same ceremony.