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Opinion – Vinicius Torres Freire: Ideas from Lula’s economists to lower the cost of credit


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Luiz Inácio Lula da Silva’s economic team spent two days visiting the financial center of São Paulo. The balance of comments from people in “the market” was neutral to good. The prices of money and asset markets, the real opinion of finance, stayed the same, with some help from the world economy.

There was some noise and fleas in the ears that heard the president of the BNDES, Aloizio Mercadante, say that the government will change the TLP, the Long Term Rate of the federal development bank, via law. Such a shift is not consensus even among government economists, to say the least.

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After the upheavals of November and December, when Lula flouted the idea of ​​controlling the public debt, there was relative calm. In January, things stabilized at a still bad level, with some relief in interest rates. But rates are 1 point to 1.5 points (depending on the term) above the level of early November (when they tended to fall).

The real even appreciated, but little. It closed on Tuesday at R$5.07. Market people say it could have reached R$ 4.80. Predicting the exchange rate or the price of oil is usually a very wrong guess, but it is a fact that the dollar has been falling around the world. Considering changes in currencies from comparable countries, BRL 4.90 could be a reasonable guess. It would be a relief in inflation and interest.

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As there was the sururu in November-December and as the government is going to present its debt control plan (“new fiscal rule”) by April, we will have at least seven or eight months of high interest rates beyond our reckoning, at best and if all goes well. It’s growth that goes down the drain.

People from “the market” complained that the government did not present clues about the new fiscal rule. Presenting pieces under construction of such a serious and complicated project is asking for nonsense.

Minister Fernando Haddad (Finance) spoke of improving credit: more competition, implementing measures proposed by the Central Bank, reducing “spreads”. Nothing to suggest getting your hands on interest rates.

Mercadante, president of the BNDES, spoke of changing the TLP via a bill. The TLP is the basic cost of money borrowed from the BNDES, a rate that since 2018 has replaced the wildly subsidized TJLP (roughly speaking, the government paid the bill for the difference in interest from parent to child, for companies in general).

It is hard to imagine how the TLP can be reduced without subsidies. It is possible to invent ways to lower other costs that weigh on the total BNDES fee (BNDES remuneration, remuneration and costs of intermediary banks for the loan, for example). Specialists can think of other ways for the BNDES to operate, the type of line offered to each client, etc. But it is speculative, uninformed and idle to guess at possibilities in such a technical matter.

The fattening of the BNDES balance sheet and the lowering of its rates are a sad memory, the work especially of Dilma 1. Investment by the beneficiary companies did not increase and the industry that the government now wants to rebuild has stagnated or fallen after 2010, etc., to sum up a very catastrophic opera.

The idea of ​​productive change through a “green transition” sounds great. How and what one wants to do is not known. The BNDES can play a role there, yes, in addition to the government. There would be the possibility of a process of effective government intervention discoveries if Brazil had a more functional market economy (without debris that impede or distort private investment) and stabilized (with controlled debt and inflation and, therefore, lower interest rates).

The temptation is to invent some magic with interest rates. It sucks.

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