Investment Tax Breaks

Finance Minister Guido Mantega has announced that the government is considering tax breaks to stimulate long-term lending for infrastructure development. We believe that the move represents an acknowledgement that the current levels of public sector investment - particularly through state development bank BNDES - are unsustainable, and marks the first stage of government efforts to transfer some of the burden with the private sector. However, with BNDES lending still on the rise, we will be looking for concrete signs that the incoming administration is pushing for the bank to shift away from its dependence on government financing to rely more on the market.

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