Government fears that the BC’s enhanced autonomy will generate a cascade effect on other bodies – 02/22/2024 – Market

The PEC (proposed amendment to the Constitution) that transforms the Central Bank into a public company with fiscal and budgetary autonomy generates fear in the government of a cascade effect on other bodies.

The articulation around the proposal once again stressed the relationship between President Luiz Inácio Lula da Silva (PT) and the president of the institution, Roberto Campos Neto.

Lula and Minister Fernando Haddad (Finance) see Campos Neto working behind the scenes for the construction of the PEC, authored by Senator Vanderlan (PSD-GO).

Before the text was delivered to Congress, BC directors debated the proposal and supported it. Among them, there is even a discussion on how the PEC can be improved.

Under the PEC, the BC becomes an institution of a special nature with technical, operational, administrative, budgetary and financial autonomy, organized in the form of a public company and with police power.

The proposal removes any “guardianship or hierarchical subordination” of the BC to the government. The model follows the budgetary autonomy of most autonomous central banks in the world.

One of the problems after the presentation of the PEC was the negotiation of career restructuring at the BC.

The situation generated an impasse on how to deal with the negotiations at the same time that there is a proposal that could completely change the structure of the BC and its labor relations, which includes hiring and readjusting salaries.

If the PEC is approved, the BC will have the freedom to create your career plan and define salaries.

At the Ministry of Finance, there is concern that the BC will become a BNDES (National Bank for Economic and Social Development) to decide on adjustments. The bank is famous for giving its employees additional thirteenth salary in the form of profit sharing.

Among members of the Executive, there is also fear that the change in the BC will open a queue in Congress for other bodies to follow the same example — which could create different parallel budgets and reduce the government’s control over public management.

The proposal was also poorly received politically by PT leaders. Haddad had already been informed of the autonomy proposal, but did not like the fact that the PEC was filed in an environment in which the Executive has lost budgetary space to Congress.

The discontent occurred after the end-of-year barbecue, at Granja do Torto, with the participation of Campos Neto.

The meeting signaled, at the time, the beginning of a phase of greater calm after Lula’s turbulent relationship with Campos Neto, which marked the first year of government. Now, however, Haddad has not spoken to the BC president.

The government is also concerned that the proposal will end up opening a loophole, in the future, for senators to have greater interference even in decisions on names for BC boards, taking power away from the Executive — a view considered unfounded by the text’s defenders. In countries where the BC has budgetary autonomy, this does not happen.

Today, the Senate already has the responsibility for examining and approving the Executive’s nominees for the BC board and presidency.

Despite the government’s fears, supporters of the PEC argue that it already produces enough money to finance the Central Bank’s budget. The proposal envisages the use of revenues from so-called seigniorage to finance its expenses. Seigniorage is the private sector’s opportunity cost of holding currency compared to other interest-bearing assets.

The author of the PEC says that the use of seigniorage revenue to finance the BC’s activities is consistent with the procedures adopted among the most important central banks in the world, such as Canada, the United States, Sweden, Norway, Australia, New Zealand, in addition to the European central bank.

At BC, the assessment is that the approval of the PEC will not be bad for the Executive, depending on the format approved by Congress. One of the arguments is that it can free up space in the Budget for other expenses.

There is still concern at the bank about the risk of “melting” the staff.

Vanderlan, author of the PEC, minimizes the tension generated by the proposal, says that the text will not take away power from the Executive in appointing directors and that the measure will contain the flight of public servants from the municipality to the private sector.

“If the issue is with the president of the BC, Roberto will not benefit in any way. After this year, he is out. In January, he is no longer president of the BC, he will take care of his life”, he says.

The PEC rapporteur, Plínio Valério (PSDB-AM), denied the Sheet that it will include in its report the power for the Senate to appoint the BC board — as the government, which today has the prerogative, even suggested.

“I have no desire to do that. The concern is that we would place all the responsibility on the Senate, take away from them what they have today,” he admitted.

The rapporteur guaranteed that he will not include anything in the PEC text that takes power away from the government.

“This autonomy cannot be total freedom. We do not want to lose the prerogatives of the Senate, but we also cannot gag the government. This is not Alexandre de Moraes [ministro do Supremo]”, he stated.

Valério anticipated that he will create a trigger in the PEC to allow the BC itself to have the power to define its career plan and readjustments. “There is a BC employee who takes care of Pix earning R$4,000,” he said.

He also minimized any possible friction between Haddad and Campos Neto in relation to the PEC.

“You don’t have to worry about that. Just as I’m not going to leave my office to listen to Haddad, I’m not going to listen to Roberto Campos. I like him, but I’m not going to listen,” he stated.

The president of Sinal (National Union of BC Employees), Fábio Faiad, said that the PEC hinders salary negotiations.

For him, the government should exhaust negotiations to resolve the “most glaring” problem, which is the salary adjustment, and then discuss the format of the PEC. “They came in with the PEC, hindering negotiations that were already difficult and now we are trying to move forward,” he said.