Brazil cannot just be the ‘farm of the world’, says Mercadante when taking over BNDES

The president of the BNDES (National Bank for Economic and Social Development), Aloizio Mercadante, defended this Monday (6) a “more active” position by the bank, with special attention to the industry, and pointed out that Brazil cannot be just a exporter of agricultural commodities.

The speeches took place during Mercadante’s inauguration ceremony in Rio de Janeiro. President Luiz Inácio Lula da Silva (PT) is accompanying the event.

“One of the dimensions for the strategic development project is exports, not just agricultural commodities,” said Mercadante.

“It’s very good, as the dear minister Carlos Fávaro says [Agricultura], that Brazil is the farm of the world. It’s very good, but it can’t just be the farm. Industrial products with high added value are essential for Brazil’s development,” he added.

Mercadante also spoke of “adjusting” the BNDES interest rate, the TLP (Long Term Rate), but without a return to the old pattern of subsidies in PT governments.

“It is very important to understand the following: we do not want, and we are not demanding, a return to the subsidy pattern, as occurred in the past, but a more competitive interest rate, especially for micro, medium and small companies”, he said.

For Mercadante, the TLP “shows enormous volatility and represents a financial cost above the cost of the federal public debt”. “It unnecessarily penalizes micro, small and medium-sized companies,” he said.

Currently, BNDES loan agreements are pegged to the TLP, which is more in line with market rates. In 2018, this modality replaced the TJLP (Long-Term Interest Rate), which was lower due to a government decision and ended up imposing non-explicit costs on the bank’s credit policy.

The TLP considers the consumer price index (IPCA, official inflation) plus the real interest rate on Treasury bills (NTN-B). Last week, Mercadante and the financial director of the BNDES, Alexandre Abreu, also defended changes in the TLP, the long-term interest rate charged by the bank. Both, however, stated at the time that the development bank does not intend to resume subsidized credit policies, and that any adjustment will not be funded by the Treasury.

Ministers also attended Mercadante’s inauguration, including the vice-president and minister of Development, Industry, Commerce and Services, Geraldo Alckmin.

Other names are Rui Costa (Casa Civil), Wellington Dias (Development and Social Assistance), Marina Silva (Environment), Márcio França (Ports and Airports), Luiz Marinho (Work and Employment) and Anielle Franco (Racial Equality).

The list of participants also included the president of the PT, Gleisi Hoffmann, and the former president of the Republic Dilma Rousseff (PT), in addition to the governor of Rio, Cláudio Castro (PL), who supported Jair Bolsonaro (PL) in the electoral race, and the mayor of Rio de Janeiro, Eduardo Paes (PSD).