Mercadante tells Febraban that there is no room for BNDES subsidies

On the same day that the stock market had a sharp drop after the announcement that the technical coordinator of the transition of government, Aloizio Mercadante (PT), could preside over the BNDES, the PT member met this Monday (12) with Febraban (a federation of banks) to address, among other topics, the development bank itself.

According to the entity, he stated that there is no room in the public accounts for subsidy policies from the development bank, such as those implemented in previous PT administrations —the fear that the administration of president-elect Luiz Inácio Lula da Silva (PT) be interventionist in the economy was one of the main factors for the market’s reaction this Monday.

Mercadante met with the president of Febraban, Isaac Sidney, after Lula’s graduation ceremony. According to the entity, he also said that the government would not grant loans for projects abroad, as in past administrations.

Also according to Febraban, the conversation between the two took place with Mercadante as the technical coordinator of the transition group, and not as a candidate to hold a position in the government from 2023.

Rumors that circulated this Monday in the market indicating the name of the petista for the presidency of the development bank, with possible changes in the State Law to allow the appointment, were pointed out by financial agents among the reasons that led the Brazilian Stock Exchange to a fall of about 2% this Monday.

Questioned by journalists, Mercadante refused to answer whether he will be appointed to head any ministry or state company in the next government.

Among the points addressed in the meeting with the president of Febraban, Mercadante would have said that there is no fiscal space for the reissue of subsidy policies adopted by the BNDES in PT governments in the past, in a possible reference to the policy of national champion companies.

Still according to reports about the dialogue that took place between Mercadante and Sidney, the PT candidate also said that the BNDES needs to assume a greater role in the agenda of decarbonization, energy and ecological transition of the economy, as well as in the process of reindustralization of the country.

The search for investments (funding) in the private sector to ease the public accounts and the discussion about a kind of Guarantee Fund to mitigate credit risk, along the lines of the FGC (Credit Guarantee Fund) in the banking sector, were also topics pointed out by the petista in the conversation with the president of Febraban.

Mercadante also said that the BNDES does not have the authority to promote changes in the TLP (Long-Term Rate), the interest rate used in projects financed by the BNDES, since it stems from a law approved by Congress, and any change will be preceded by an in-depth technical discussion. .

Last week, he had stated that perhaps there is room for some flexibility in the rates practiced for long-term financing.

“The TLP is rigid. Not only is it very high, it is not flexible. So one idea we are working on is a menu of TLPs, depending on the investment terms. Of course, an interest rate on an investment of five years is completely different from an interest rate for 30-year investments. The return time has to be entirely related to the interest rate that the borrower will pay”, he said, in the interview.