Brazil's Central Bank announced on Thursday it will draw up to US$36 billion from the country's foreign exchange reserves to make loans to companies indebted to financial institutions abroad.

The bank estimates that 4,000 companies will benefit from the measure. The money, to be loaned to both domestic and foreign companies that operate in Brazil, will have to be repaid in a year,

To receive the loan, companies must have debts maturing between October 2008 and December 2009. The bank expects a total demand of US$20 billion, according to its president Henrique Meirelles.

The bank established a fixed interest rate of 1.5 percent plus the LIBOR (London Interbank Offered Rate) of 1.24 percent, which will be charged in all operations.

The loans will be made through several regular banks, both private and state-owned. The Central Bank will release the money on specific dates. The first three dates have already been fixed – February 27, March 13 and March 27.

With the measure, the government aims to compensate the absence of credit in foreign banks, caused by the international financial crisis. According to Meirelles, the measure is expected to help generate jobs and maintain the vitality of the economy.

(Xinhua News Agency February 6, 2009)