July 30, 2015 - 11:30 ( Brasília )

Brazil reaches deal with Sweden on financing Saab fighter planes

Brazil has reached agreement with the Swedish government to reduce the cost of financing a $5.4 billion sale of 36 Gripen fighter jets to the Brazilian Air Force, a Brazilian Defense Ministry spokeswoman said on Wednesday.

Protracted talks over the terms of the financing had delayed a final agreement on the Gripen NG fighter jets made by Swedish planemaker Saab AB.

In the midst of a fiscal crunch, the Brazilian government had sought to reduce the 2.54 percent interest rate initially agreed to last year with Sweden"s export credit agency SEK, as part of an austerity drive by Finance Minister Joaquim Levy.

The ministry planned to release details on the new agreement later in the day.

The Folha de S.Paulo newspaper reported on Wednesday that the Swedish government has agreed to lower the interest rate to 2.19 percent, on the condition that Brazil partly compensates it for lost interest.

If the two sides had been unable to agree on financing terms for the contract, Brazil and Saab would have had to renegotiate the jet deal.

The first Gripens should be delivered to Brazil in 2019. Saab plans to set up a Brazilian assembly line producing the fighter jets through 2024 in partnership with Brazilian planemaker Embraer SA.

Brazil awarded the contract in December 2013, choosing Saab"s fighter over Boeing Co."s F-18 Super Hornet and the Rafale made by France"s Dassault Aviation SA.

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