Lapse of Pronampe-FGO Expansion May Raise SME Delinquency, UBS BB Warns

The expiration of Brazil's provisional measure MP 1355, which had expanded the Pronampe-FGO credit line, is expected to reduce monthly credit origination for small and medium enterprises from R$8-9 billion back to R$2-3 billion. UBS BB warns this could pressure asset quality and increase delinquency among PMEs in coming months. The measure's lapse marks a reversal of a temporary policy support, with implications for Brazilian credit markets and SME financial health.