Delay in FGTS council blocks package for construction – 05/19/2023 – Market

The Board of Trustees of the FGTS (Fund for Guaranteed Length of Service), the body responsible for determining how the fund’s resources are applied, has not yet met in 2023 and, as a result, is blocking a package of measures to stimulate civil construction.

The original calendar foresaw meetings in March and May, but the current estimate is that the first one will only take place in early June.

For this, it is necessary for the government to appoint its representatives on the council. So far, only the presidency has been occupied — by Minister Luiz Marinho (Labour). The folder, responsible for naming the names, did not respond to questions.

The measures defended by the government are aimed at lowering the down payment paid by people who buy real estate and provide liquidity for companies that build low-income housing.

The first of the initiatives is to allow the worker’s balance in the FGTS to serve as a guarantee for real estate financing installments. With this, the risk of financing is reduced and, consequently, the interest and the minimum down payment.

The second is an increase in the price ceiling for properties that can be financed by the FGTS, which are out of date due to inflation.

The government is also considering allowing informal income to be used by people who take out FGTS financing. In that case, a law passed in Congress would be necessary before the board of trustees takes a position.

This point is of particular interest to builders in the North and Northeast, where informal income is more present. Caixa has a study showing that default on loans is lower among informal workers than formal workers.

Another novelty would be a line of credit for builders focused on low-income people to have liquidity. Today, the FGTS finances property buyers with lower interest rates. This line will also allow companies to get cheaper resources to build housing for this public.

The credit line will not have a subsidy, but it is cheaper because the FGTS has lower rates than the market.

Part of the measures, however, may be affected by the judgment in the STF (Supreme Federal Court) that analyzes whether the remuneration paid by the fund to the shareholders is constitutional.

So far, two ministers have already voted to replace the rates paid today (3% per year plus the TR, which has been close to zero) with the correction applied to savings, of 6.17% per year plus the TR. The trial was interrupted by a request for views from Minister Kassio Nunes Marques.

The lack of names on the FGTS board of trustees has to do in part with the government’s delay in setting up the second and third levels of the ministries, which still continues.

The slowness displeases the sector, which is waiting for measures to leverage undertakings and has repeatedly demanded the government for the council to be composed.

The housing construction sector is divided into two income segments. The highest has its activity linked to the interest rate. As Selic is high, the branch is not heated. Compensation would come from the other party, from people with lower incomes.

This group depends on government aid in programs such as Minha Casa Minha Vida and FGTS resources. The measures that will be adopted by the government will allow leveraging this segment, hence the interest of the sector in its speed.

The first decree to determine the members of the Board of Trustees was published on April 20 of this year and indicates which folders will appoint people to compose it.

In addition to the Ministry of Labor, representatives of the Civil House, Cities, Finance and Management will be on the Board of Trustees. The choice is made by the minister of each portfolio. In Cities, the representative will be the executive secretary, Hildo Rocha (not yet named).