BRASILIA – Brazilian President Michel Temer has signed a decree liquidating the Sovereign Fund created in 2008 by then-head of state Luiz Inacio Lula da Silva, the government said on Tuesday.
The decree was published in the country’s official gazette and states that the value of the fund – which will be detailed in a report by the Finance Ministry in the third quarter of 2018 – will go toward repayment of the foreign debt, which reached 3.5 trillion reais ($1 trillion) in 2017.
At the end of last year, Brazil’s Sovereign Fund contained 26 billion reais ($7.12 billion), of which, so far, the Temer administration has reclaimed a total of some 3.5 billion reais ($959 million).
The termination of the fund, made official on Tuesday, was among a series of measures that the government announced in February aimed at tackling the budget deficit which, according to the official forecast, will close out 2018 at 159 billion reais ($43.56 billion).
Brazil’s Sovereign Fund was created in December 2018 by Da Silva, in an effort to support national companies in their export activities and to act as a mechanism for promoting investment in the country.
The fund was initially infused with 14.2 billion reais (then equivalent to $6.1 billion) and was endowed with surplus funds from oil exploitation as well as other operations by state-run entities.