Government proposes to raise INSS payroll interest to 1.97% to resolve impasse – 03/28/2023 – Market

After a meeting of ministers with President Luiz Inácio Lula da Silva (PT), the government decided to propose an increase from 1.70% to 1.97% of the INSS (National Social Security Institute) payroll interest ceiling, in an attempt to end the stalemate that made public and private banks suspend the granting of credit lines to retirees and pensioners.

The decision took place shortly before a meeting of the CNPS (National Social Security Council), previously scheduled for 2 pm. The body, which has 15 members – six of which are from the government – ​​still needs to deliberate on the new fee.

The agreement was sealed at a meeting at the Alvorada Palace earlier this Tuesday (28) afternoon. Ministers Carlos Lupi (Social Security), Fernando Haddad (Finance), Luiz Marinho (Labor) and the Executive Secretary of the Civil House, Miriam Belchior – who represented Minister Rui Costa, who was away with a severe flu, took part.

Also present was the Executive Secretary of the Treasury, Gabriel Galípolo.

The meeting was surrounded by conflicting information from the government. After being confirmed on Monday night, the Civil House issued a note this Tuesday morning denying that a new meeting to discuss the fee would take place.

On Monday night (27), a meeting between ministers of the Lula government on payroll loans for retirees ended without an agreement. They decided to break the deadlock so the president could arbitrate on the issue.

The rate review was being discussed by a working group, which included the participation of members of the government and representatives of the financial system and banks.

On Friday, at a meeting in São Paulo, bank representatives had signaled that they could accept a rate lower than the 2.08% per month proposed at the previous meeting, but higher than 2% per month. According to interlocutors, the institutions presented a rate of 2.01% as an alternative amid a series of scenarios.

The trade union centrals, bodies linked to retirees and confederations of workers from different sectors defined in the second that they would accept a limit of 1.9% for the interest rate of the INSS payroll loan.

The imbroglio began after the reduction of the INSS payroll loan interest ceiling from 2.14% to 1.7%, approved by the council on March 13.

As shown to Sheet, the change was due to a noise between Lupi and the Planalto Palace. According to reports from members of the government, the measure was even presented to Lula in a meeting on March 8 and the representative gave the endorsement for the proposal to begin to be processed internally and to hear the ministries involved, in particular the Treasury.

Lupi, in turn, understood —according to interlocutors— that he could keep analyzing the topic at the CNPS meeting on the 13th.

The cut in the INSS payroll loan interest ceiling was approved by 12 of the 15 CNPS participants – the three employer representatives were the only votes against the measure.

As a result of the cut in the INSS payroll interest ceiling, private and public banks suspended credit operations in this modality. Among the institutions are Banco do Brasil, Caixa Econômica Federal, Bradesco, Itaú, Pan, Mercantil do Brasil, C6 Bank and Daycoval.

According to estimates made by the financial sector, by offering payroll loans to retirees and pensioners at an interest rate of 1.70% per month, banks would have a negative return of 0.23% on operations. This means that institutions would suffer losses with the modality, which is not allowed by a resolution of the CMN (National Monetary Council).