Sovereign Fund starts with up to US$ 20 billion
Folha de S. Paulo - 05/07/2008
The Brazilian sovereign fund that must be launched in the end of June can count with up to US$ 20 billion in cash and have part of the tax collection as one of the sources of its financing, «a fund of fiscal savings», said Finance Minister, Guido Mantega, to the newspaper Folha de S. Paulo. According to him, the priority of the sovereign fund will be to stimulate sales and investments of Brazilian companies abroad and, following it, « to help decrease the excess of US dollars in the market ». In both cases, the objective is to contain the external accounts deterioration, the greatest concern of the Ministry of Finance at the moment. With the forecast for the fund's launching at the end of next month, Mantega said that the fund will be initially formed by something equivalent to between 5% and 10% of the international reserves. "But it will not come from the usual reserves of the Central Bank (US$ 196 billion). It is more than that, and can reach US$ 20 billion", said the minister. Initially, a good part of the funds will be destined to buy debentures of the BNDES (National Bank of Social and Economic Development), so the institution can have funds destined to finance Brazilian companies abroad. According to Mantega, the objective of transferring those funds to BNDES is to increase the bank's financing lines for exportation. Currently, BNDES finances around US$ 4.5 billion to US$ 5 billion for exportation a year. With the fund, this amount will expand significantly.