Nobel Prize in Economics says that interest in Brazil is equivalent to the death penalty

Professor at Columbia University and winner of the Nobel Prize in Economics in 2011, Joseph Stiglitz, declared this Monday (20/3) that the interest rate in Brazil is “shocking” and is equivalent to a “death penalty” . The statements were made during the seminar “Sustainable Development Strategies for the 21st Century”, promoted by the BNDES.

“Your {Brazil’s} interest rate is indeed shocking. A rate of 13.75%, or 8% real, is the kind of interest rate that will kill any economy. It’s amazing that Brazil has survived this, which would be a death penalty,” he said.

He attributed the fact that the country survived these interest rates to “state banks, such as BNDES, which have done a lot with these interest rates, offering funds to productive companies for long-term investments with lower interest rates”.

For the economist, Brazil’s historically high interest rates have imposed a “competitive disadvantage.” The question is, where would they be if they had a more reasonable monetary policy? I would say it would be much higher economic growth,” Stiglitz said.

At the same BNDES event, the president of the Federation of Industries of the State of São Paulo (Fiesp), Josué Gomes da Silva, defined interest rates in Brazil as “pornographic”. According to Silva, many want to associate the current Selic rate with a “fiscal problem”. For him, such justification “is inconceivable in a country with the wealth of Brazil, which has a gross debt of 72% or 73% of GDP and foreign exchange reserves of around 17% or 18% of GDP”.