On Wednesday (12/3), the House approved the Provisional Measure 445/08, the third one to be enacted with the purpose to combat the effects of the international financial crisis in Brazil. It allows Caixa Econômica Federal (Federal Savings Bank) to transfer to the Federal Government only part of the dividends it will be entitled to receive, from 2008 to 2010. The matter will still be voted by the Senate.

The Provisional Measure’s objective is to direct the funds that would be returned to federal government, which is the controlling shareholder of Caixa, to housing undertakings. The extra funds that will be kept at Caixa – around R$1 billion – should be used for loans targeting the working capital of the construction industry.

The approved text is a conversion bill by Deputy Paulo Pimenta (PT-RS), who made some amendments on the PM. Among them, there is the mandatory online report, by Caixa, of the total amount of the resources used because of the PM.

Profit
Caixa will transfer to the Union a minimum of 25% of the adjusted net profit. The rapporteur also included the determination that Caixa send to Congress, every semester, a report detailing those loans.

The amendment by the leader of DEM, Deputy Antonio Carlos Magalhães Neto (BA), determines that Caixa return to National Treasury, from 2011 on, the resources that have not been used in loans linked to the PM. These amounts will be corrected, according to a pre-defined rate by National Monetary Council (NMC).

Profit increase
According to the Finance Minister, Guido Mantega, the funds with which Caixa can count by means of the PM, will amount to around R$1 billion. The bank will be allowed to use this amount to cover 35% of the credit risk on new operations regarding loans of working capital. That measure depends on a regulation by NMC.

In the first nine months of 2008, Caixa had a net profit of R$ 596,000,000- 87.5% more over the equivalent period in 2007.

When disclosing its balance for the second semester (a net profit of R$69,800,000), Caixa informed that it had already received a significant amount of demands by companies interested in this working-capital line, which should amount to R$3 billion. Companies having already launched projects, but having problems in obtaining resources for works, will be given priority.

Social Housing
One of the changes effected by the rapporteur allows the government to operate the Program for Social-Interest Housing Subsidy , according to the original rules of the law which created it (10198/4), without the need of fund decentralization to the states and municipalities.

Another Law (11.578/07) had already granted that permission for 2007 and 2008. With the new text, there will be no extension in the time limit for that.

Roads
In the approved text, Paulo Pimenta allows the National Department on Infrastructure of Transportation (DNIT) to use its budget in maintenance, refurbishing and construction works in highways that had been transferred to the states’ management.

Those works should not depend on a previous requirement from the states governments managing the roads, be they regular or emergency works; they should be irrevocably concluded until the end of 2010.

Loans to municipalities
The municipalities have now two more years to get loans with financial bodies and institutions related to foreign governments. The current deadline expired in June 2008, after being extended three times since 2000.

The new deadline will be counted from the publication of the act of law of the PM. The loan should have a positive evaluation from the financing agency, from BNDES and from Caixa.
The funds should be exclusively destined to the complementation of ongoing programs.

Report - Eduardo Piovesan
Editing - João Pitella Junior
Translation - Positive