Brazil concerned by overheated credit deals

The Brazilian government is increasingly concerned by a boom in credit deals, which now amount to more than a third of the country's gross domestic product (GDP).

Personal, corporate and institutional credit now tops 957.6 billion reais (US$550 billion), which equals 34.9 percent of Brazil's property GDP, the Central Bank announced yesterday.

According to the bank, private borrowers are responsible for a total of US$189.5 billion, mostly fueled by an increase in car-leasing Brazil property agreements.

The head of the Central Bank Economic Department, Altamir Lopes, said yesterday that the total amount of loans is expected to increase by 20 per cent to 25 per cent in 2008 compared with last year, about 40 per cent of GDP in Brazil property. He said that growth was "reasonable" in comparison with similar economies.

However, Finance Minister Guido Mantega yesterday expressed concern over this issue and said that he will meet with the heads of the bank this week to discuss measures to slow consumption and prevent inflation.

The Central Bank monetary policy board said that was referring to raise a key interest rate now stands at 11.25 percent, to counter inflation. Bank aims at 4.5 percent inflation target this year.