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Brazilian government launches new BNDES interest rate to reduce subsidies

Brazil's Ministry of Finance on March 31 said its establishing a new interest rate as of Jan. 1, 2018, in order to gain macroeconomic stability, reduce subsidies and increase monetary policy effectiveness of state-run development bank Banco Nacional de Desenvolvimento Econômico e Social, or BNDES, as was previously reported.

The interest rate, named TLP, or Long Term Rate, will be aligned with the National Treasury's inflation-linked bonds and will be calculated on monthly basis instead of a quarterly basis, like the current long-term interest rate, the TJLP, according to a statement.

Overall, the TLP will provide macroeconomic stability on multiple levels, the ministry said, such as increasing contract security, encouraging long-term private financing and contributing to the country's fiscal balance. It will also allow BNDES to expand its operations in an integrated manner to the capital market, the statement noted.