Dec. 11 (Bloomberg) -- Brazil’s government will cut taxes by 8.4 billion reais ($3.6 billion) to revive the slowing economy and meet a 4 percent growth target next year, Finance Minister Guido Mantega said.

The stimulus plan will also allow the central bank to use international reserves to help Brazilian companies repay dollar debts, thus easing pressure on the weakening local currency. The tax cuts on personal income, consumer loans and automobiles will help sustain economic growth as demand for commodity exports dries up, Mantega said.

“If companies have the courage to keep investments and avoid layoffs, we’ll be able to meet our growth target,” Mantega told reporters today in Brasilia.

Brazil’s economic expansion may slow by more than half next year to the lowest level since 2003 as the first crisis since World War II to affect the U.S., Europe and Japan at the same time looms over Latin America’s biggest economy. Analysts covering Brazil expect economic growth to fall to 2.5 percent next year from 5.2 percent this year, according to a central bank survey published Dec. 8.

“A fiscal expansion right now doesn’t have the strength to get Brazil to its growth target,” said Roberto Padovani, chief economist at WestLB AG in Sao Paulo.

Demand for loans made through the banking system may total $10 billion and be limited to 125 percent of the amount of debt maturing through the end of 2009, Central Bank President Henrique Meirelles said.

‘Takes Pressure’

“The measure takes pressure from the credit market in reais and increases the availability of the dollars in the Brazilian currency market,” Meirelles said today at the press conference with Mantega.

The central bank measures could relieve some pressure on the local currency, Padovani said. The real jumped 3.4 percent today, the most in two weeks, to 2.3659 per dollar. Since September it has lost 32 percent, more than any other of the 16 major currencies tracked by Bloomberg.

Brazil’s central bank yesterday signaled it may soon join the effort to spur economic growth by cutting interest rates as early as January. Policy makers kept the benchmark rate at a two-year high as inflation remains above target.

To contact the reporter on this story: Andre Soliani in Brasilia at at asoliani@bloomberg.net.

Last Updated: December 11, 2008 17:10 EST