Interest rates are pornographic, says president of Fiesp – 03/20/2023 – Market

On the eve of the Copom (Monetary Policy Committee) meeting, the president of Fiesp (Federation of Industries of the State of São Paulo), Josué Gomes da Silva, said this Monday (20) that interest rates in Brazil are ” pornographic” and incompatible with the fiscal situation of the country.

In a seminar at the BNDES (National Bank for Economic and Social Development), he also defended a tax reform that would reduce the burden on the industry to levels closer to those currently offered to agribusiness.

“The current interest rate in Brazil today is inconceivable,” he said, claiming that a country with a gross debt equivalent to 73% of GDP and international reserves of US$ 370 billion (R$ 1.9 trillion) cannot be considered a country with tax problem.

“It’s not a good explanation for the pornographic interest rates in Brazil”, reinforced, in chorus with other participants of the event, the bank’s first seminar under the management of Aloizio Mercadante, called “Sustainable Development Strategies for the 21st Century”.

“If we don’t get down [os juros], there will be no point in making industrial policies. Because the main industrial policies, those that are more horizontal and therefore affect the economy as a whole, are precisely a compatible interest rate and, obviously, a tax reform that creates equality between sectors.”

In a survey carried out by Reuters, economists believe, however, that the Central Bank will insist on its aggressive posture, leaving the Selic rate at the highest level in six years, at the same time that it will probably ward off hopes of any imminent easing of monetary policy .

This Monday, the Central Bank’s Focus bulletin brings a similar assessment. The analysts consulted made small adjustments to their economic projections, but they continue to see maintenance of the basic interest rate at the current level of 13.75% both in this week’s meeting and in May.

The forecasts are maintained even in the face of the turmoil that has affected the global banking sector in recent days and in the face of expectations about the new fiscal framework, which has been debated between the economic area and President Luiz Inácio Lula da Silva (PT).

The president of Fiesp stated that “any strategy for national development involves a new industrialization of Brazil”, in line with what Mercadante has been defending. He mentioned that the sector was already responsible for 30% of the GDP and today it is for 12%.

In addition to cutting interest rates, he defended a reduction in the tax burden on the sector, which, according to him, accounts for 30% of all taxes produced in the country. “Of the industry’s added income, 45% represent taxes. Agro, which is pop, which is Tech, which is everything, pays 5%.”

In addition to a lower tax burden, added President Fiesp, agribusiness also has a financing plan with subsidies totaling R$ 13 billion per year. “Just offer us the same conditions that are offered to agro and we will have a pop industry, Tech and everything”, he concluded.