Brasília, June 17, 2003 (Agência Brasil - ABr) - The Minister of Finance, Antônio Palocci, approved the proposal presented yesterday (16) by the president of the Central Workers Union (CUT), Luiz Marinho, to reduce bank spreads (the difference in rates between what banks pay to obtain resources and what they charge clients for loans). "It is an efficient idea, because it creates a system of credit between firms and banks and can take care of the spread in an effective manner," the Minister remarked.

Within the next fifteen days, Palocci will receive representatives of labor unions and the Brazilian Bank Federation (Febraban) to discuss the proposal, which consists in the establishment of an agreement between banks and firms to discount from payrolls the amounts owed by employees in loan installments, at lower interest rates than those currently charged.

Marinho bases the idea on the allegation made by Febraban that spreads are high as a result of high indexes of non-repayment. With firms discounting installments from payrolls, there would be no more risk of non-repayment. The union leader estimates that monthly interest rates would drop from the current 10% to around 3%. (DAS)