Without mentioning Caixa, Guedes says that Brazil's government plans IPO of "digital bank created for emergency aid"

Minister of Economy said this during an event for entrepreneurs and investors

People line up at a Caixa agency to try to receive emergency aid from the government. Photo: Reuters/Pilar Olivares/File Photo

20.Oct.2020 13:54 BRT
UPDATED 14:06 BRT

The aid, the government’s main push to tackle the coronavirus crisis, has been paid exclusively by Caixa since April. Lasting until December, it will imply a total expenditure for the federal government of BRL 321.8 billion;
Guedes also argued that this is a good time to come to Brazil.

Without mentioning Caixa Econômica Federal, Brazil’s Economy Minister, Paulo Guedes, said on Tuesday that the Brazilian government “plans an IPO of the digital bank created for granting the COVID-19 emergency aid.”

The aid, the government’s main push to tackle the coronavirus crisis, has been paid exclusively by Caixa since April. Lasting until December, it will imply a total expenditure for the federal government of BRL 321.8 billion.

“We digitized 64 million people. How much is a bank with 64 million people worth? Low-income people, but people who were bankrolled for the very first time, so they will be loyal for the rest of their lives,” said Guedes at the Milken Institute Global Conference. “We are planning an IPO (initial public offering of shares) of this digital bank that we produced in less than six months,” added the minister, without clarifying whether he referred to Caixa or just a unit of the state-owned bank.

Guedes argued that this is a good time to come to Brazil, after emphasizing that there will be no abandonment of the spending ceiling (limit imposed by Michel Temer‘s government to curb the increase in the country’s fiscal deficit), which the government remains engaged in, alongside its agenda for the modernization of regulatory frameworks, which will create an exchange rate hedge mechanism for long-term investors.

Guedes also said that Brazil should join the Organization for Economic Cooperation and Development (OECD) in one year, adding that the country is now meeting two-thirds of the necessary requirements to do so.

The minister also stressed that the country’s Gross Domestic Product (GDP) should fall 4% this year, or “4 and a little at most” – a slightly more optimistic forecast than the 4.7% drop officially made by the Ministry of Economy.

Translated by LABS