Brazil's 34 bn housing plan have a significant impact in the economy

Brazilian government announced a massive 34 billion reais ($15.1 billion) program to build a million homes for low-income families as President Luiz Inacio Lula da Silva seeks to spark growth in the country's economy.

According to Dow Jones news agency, the federal government would provide BRL16 billion in subsidies for the plan and that the remainder would come from other sources, including the FGTS federal severance guarantee fund and the the Banco Nacional de Desenvolvimento Economico e Social (BNDES) national development bank. Budget Minister Paulo Bernardo confirmed that the housing plan would cost the government 6.5 billion reais this year, spending that will be diverted from other unidentified areas.

The long-awaited plan, called My House, My Life, is seen dropping the country's housing deficit by up to 14%. The plan also intends to create 700,000 jobs all over the country as construction companies increase hiring.

Finance Minister Guido Mantega said that the program is aimed at helping finance home construction for low-income families earning between three and 10 times the minimum wage per month. Brazil's minimum wage is currently set at BRL465 a month. Brazil's president Luiz Inacio Lula da Silva said during a televised event announcing the program," the government would quickly disburse related funds”.

The Finance Minister commented: "There is no doubt this is a bold program and of great impact on the Brazilian economy. For sure it will be one of the main anti-crisis programs this government will launch".

Equity investors are optimistic that Brazil's housing plan, which aims to build one million homes by 2011, could help jump-start the economy. Brazilian property has been boosted by the housing plan; industry experts believe that there has been a recent turnaround in the property sector due to the government implementing new initiatives, with January and February sales rising quite substantially, although many of them emphasize that the emerging markets are the property sector and tourist sector, with plenty of interest from foreign investors.