Haddad discusses inflation target with BC and talks about calendar change – 04/04/2023 – Market

The Minister of Finance, Fernando Haddad, said this Tuesday (4) that he spoke this week with the president of the Central Bank, Roberto Campos Neto, about issues such as the inflation target, distortions in tax planning and improvement in the credit market.

In a conversation with investors during an event held by Bradesco BBI, the Finance Minister mentioned the BC president several times, with whom he met the day before, and said that the conditions are being created for harmony between the Central Bank and Finance to be established once and for all.

Haddad stated that he needs to deal with a challenging scenario, which is the autonomy of the Central Bank. “First time that a finance minister is faced with a new situation, where we have to build a relationship of trust and partnership to compete for the same objectives”, said the minister.

President Luiz Inácio Lula da Silva (PT) has harshly criticized the BC president for keeping the Selic, the basic interest rate, at 13.75% per year.

Regarding the inflation target, Haddad stated that he and Campos Neto dealt with the debate, in the market and in academia, on the effect of a change in this target on the expectations of economic agents.

“There is a debate whether meta-change anchors or unanchors [expectativas]. I also discussed this matter with Roberto Campos Neto here to assess his opinion on this debate, not his opinion on the target, because we are not discussing it at this time, we have not discussed this matter throughout this year”, he said.

According to him, other issues will be discussed when the goals for the coming years are set.

“[Aí] It is time to verify whether the targets were well calibrated, whether it is the case of maintaining, whether it is the case of not adopting the Gregorian calendar, whether it is the case of making that continuous target that most countries adopt.”

According to Haddad, only Brazil and Türkiye have calendar-year targets. “Almost everyone who has an inflation target has a continuous calendar. You get closer to the target,” he said.

“I have been reading very interesting things among macroeconomists who follow what is happening in the world. We are also listening to technicians from the Central Bank.”

legal loophole

The two also addressed tax issues. The federal government is going to send a bill to Congress to close a legal loophole that leads some taxpayers to deduct from the IRPJ/CSLL (Corporate Income Tax and Social Contribution on Net Profits) significant volumes of ICMS tax benefits (tax on Circulation of Goods and Services), granted by the states to companies when the activity is costing. Haddad did not make it clear whether he will also position himself against the reduction in the case of investments.

The minister stated that “half a dozen people are using an interpretation by some judges” that is not consolidated in the superior courts and that needs to reach the STF (Federal Supreme Court) for the problem to be corrected. “We are going to make the law, relying on the understanding of the Legislature and the Judiciary,” he said.

Today, the government spends almost R$90 billion to subsidize funding, based on an amendment that entered into a law and which was sanctioned when the expectation of waiver was R$5 billion. “We are now talking about BRL 131 billion [custeio e investimento]”, said the minister.

The president of the BC said he had identified distortions worth R$300 billion, according to the minister, who did not specify the number.

UNROLLS

Regarding the debt renegotiation program for individuals, Desenrola, Haddad said that the provisional measure is ready to be signed by President Lula, which will occur as soon as B3 completes the work of developing a software that will be used by the government. and by creditors.

The government will subsidize, through a guarantee, those who have an income of up to two minimum wages, so that these families will have large discounts. R$ 15 billion will be used, according to the minister, with R$ 11 billion already set aside. The goal is to reach up to 52 million CPFs.

The minister stated that he is in talks with the banks to evaluate new measures to improve the credit environment in the country. Among them, ending the distortion of revolving credit card credit.

“In a working group with the banks, we are thinking about the credit card rotation. There are ideas that are being discussed internally to correct this distortion. [também] Yesterday I spoke with Roberto Campos Neto about the installment of debts through Pix, which can be a great innovation in the banking system, you pay in installments using this tool and improve the conditions of competitiveness and credit in the country “, said the minister.

The federal government is also going to start granting Treasury approval for PPP (Public-Private Partnership) projects by subnational entities. As a result, the states can bid on more advantageous conditions and rely on financing from the IDB (Inter-American Development Bank) and the Bank of Brazil. A call will be made for the states to present these projects.

The minister is also evaluating a request for constitutional urgency to vote on the provisional measure on guarantees, approved in the Chamber and now in the Senate. The idea is to make changes so that it returns to the other house of Parliament or to negotiate presidential vetoes.