FACTBOX-Brazil eyes emergency "war budget" to fight coronavirus

Brazil's government and central bank have entered crisis-fighting mode as they battle to limit the coronavirus outbreak's impact on public health, businesses and financial markets. The measures below, some enacted and others proposed, aim to compensate workers and firms, pump liquidity into the banking system and ensure markets operate as smoothly as possible.

FISCAL STIMULUS The lower house of Congress approved an emergency "war budget" under which ordinary fiscal rules will not apply. House Speaker Rodrigo Maia has suggested up to 600 billion reais ($113 billion) may be required.

Already, the government's fiscal measures protecting the most vulnerable and safeguarding jobs so far amount to some 350 billion reais, or almost 5% of GDP, according to JP Morgan. However, precise figures remain unclear. Economy Minister Paulo Guedes has said total measures may come to around 800 billion reais, which would be over 10% of GDP.

It is also unclear how much of that would be new spending. So far, the government has focused on loan guarantees, early social assistance payments, deferred taxes and easier access to workers' severance funds. The government has scrapped its 2020 fiscal deficit goal of 124 billion reais and now says it will be around 419 billion reais, or 5.5% of GDP. Economists at Goldman Sachs estimate the deficit will ultimately exceed 8% of GDP.

The federal government has also put forward a plan to help states and cities with 88 billion reais in loans, transfers and debt freezes to cope with public health and economic pressures. CENTRAL BANK

The central bank has pledged "to deploy its arsenal of monetary, exchange rate and financial stability policies" to fight the crisis. Its actions include: -Increasing the pace of rate cuts, lowering the benchmark Selic rate by 50 basis points to a record-low 3.75%.

-Calling for emergency powers to make sweeping purchases of "public or private financial assets", including government bonds - a big step towards "quantitative easing," analysts say. A constitutional amendment needs Senate approval. -Ramping up intervention in the foreign exchange market as the real hit a record low against the dollar. So far this year, it has sold $14 billion of reserves in the spot market, $14 billion in repurchase auctions and $10.5 billion in FX swaps.

-Opening a $60 billion swap line with the U.S. Federal Reserve that will be in place for at least six months, allowing the central bank to access dollar liquidity at favorable rates. -Repurchasing Brazilian dollar-denominated sovereign bonds from domestic financial institutions. So far, $2.9 billion has been purchased, out of a potential stock of up to $31 billion.

-Injecting up to 1.2 trillion reais of liquidity into the economy, or 16.7% of GDP. This includes loans to banks backed by their securitized credit portfolios (670 billion reais) and corporate bonds (91 billion reais), as well as lower reserve requirements for long-term deposits (203 billion reais). The National Monetary Council, which includes the economy minister and central bank president, has also supported banks by letting small lenders raise 200 billion reais through special long-term deposits backed by the Credit Guarantee Fund.

($1 = 5.30 reais)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)