BNDES Development Bank should lower interest rates-VP Brazil
2023.01.04 13:04
BNDES Development Bank should lower interest rates-VP Brazil
Budrigannews.com – Brazil’s VP Geraldo Alckmin said on Wednesday that the state-run advancement bank BNDES ought to decrease loan fees to moneylenders, raising questions on potential changes to its ongoing strategy, which is as of now lined up with market costs.
Alckmin stated to journalists that it would be “important for the BNDES to make an effort to reduce interest rates” shortly after taking office as the minister of Development, Industry, Trade, and Services.
He stated only that “it is important to create conditions to reduce the interest rate” when asked if this would require altering the so-called TLP rate that is charged by BNDES to lenders.
In order to bring state lending rates in line with market rates, the TLP was implemented in 2018 during the administration of former President Michel Temer. It supplanted the previous TJLP rate, which was set by the public authority underneath the country’s Selic base rate, to sponsor corporate advances.
Alckmin stated in his inaugural address that his ministry will oversee BNDES and emphasized the significance of strengthening the bank’s role in leveraging the economy.
“As a dynamizer of the industry competitiveness and exports, especially those of higher added value,” Alckmin asserts, should be the role of BNDES.
Aloizio Mercadante, a veteran of the Workers Party, was appointed as the next head of the BNDES by leftist President Luiz Inacio Lula da Silva. This sparked expectations of heavily subsidized credit policies, which could limit the power of monetary policy and prevent the expansion of the capital market.
Before the president took office on Sunday, his transition team said that the TLP rate needed to be changed to lower it. This could make the decisions the central bank makes about monetary policy less important.
Alckmin was appointed by Lula, seen by the market as a move due to his past as a center-right politician, after several businessmen rejected the position. Alckmin, a former governor of Sao Paulo, lost to Lula in the 2006 presidential election.
According to the market, Alckmin’s appointment would serve as a counterpoint to Finance Minister Fernando Haddad, a member of Lula’s Workers Party who agrees with the president that the state’s presence is necessary to reduce social inequality and boost the economy.
Due to indications of interference in state-owned businesses, the maintenance of the costly fuel tax exemption, and the potential reversal of liberal reforms, Lula and his team’s recent statements sparked negative market reactions. This reaffirmed doubts about how public accounts can be improved in the face of increased welfare spending.
The Planning Ministry, headed by former Senator Simone Tebet, and the Management Ministry, headed by academic Esther Dweck, were also part of Lula’s administration’s division of economic affairs.
This is in contrast to Jair Bolsonaro, the former president, who centralized decision-making and policy formulation within a single Economy Ministry.
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