Retailers meet with Lula and say they expect interest rate cuts and resumption in the 2nd half – 06/14/2023 – Market

A group of around 30 representatives of large retail companies participated in a meeting this Wednesday (14th) at the Planalto Palace with President Luiz Inácio Lula da Silva (PT) and government ministers.

After the meeting, the president of the IDV (Institute for Retail Development), Jorge Gonçalves Filho, criticized the basic interest rate (Selic, currently at 13.7% per annum) and said he expected a “regression” in the short term. According to him, government proposals that would be positive for the sector depend on this reduction.

The businessman also stated that there should be an improvement in the sector in the second half, without going into further detail.

The high interest rate, one of the main targets of criticism by Lula and members of his government, was discussed at the meeting, according to Filho.

“We noticed that there is a great difficulty in some programs [do governo] on account of interest. We have an expectation that the issue of interest rates will regress in the short term. We know that BC [Banco Central] has the rite for this to happen, but we noticed that several programs that will be good for retail, for the market, depend on that too”, he told journalists in Planalto.

“There is expectation that, with the measures that we understand are about to come, we will have a recovery in the second half. Measures aimed at credit, investment in other sectors that reflect on retail, infrastructure, for example, the president spoke a lot”, he completed.

One of Lula’s main proposals for his third administration is the new PAC (Acceleration and Growth Program), which has yet to get off the ground. The president said this week that, as of July 2, the government should launch a works program.

Vice President Geraldo Alckmin also spoke to the press after the meeting and focused on the basic interest rate in his statement. “This greatly harms economic activity. That is, it harms employment,” he said, reinforcing that the issue is worrying for retailers.

According to him, two other topics were on the meeting’s agenda: fair competition and tax reform.

In the case of the first, the compliance plan being prepared by the Treasury and the Revenue, with the participation of representatives of the sector, was discussed at the meeting, to avoid cases of retail companies that evade taxes.

The discussion gained notoriety a few months ago with large companies such as Shein and Shopee. Ministers Fernando Haddad (Finance) and Rui Costa (Casa Civil) also attended the meeting.

The retail sector has recently criticized the Lula government for the reduction in the taxation of international remittances between individuals. In April, after great repercussions and demands, the team of Minister Fernando Haddad gave up on ending the exemption of up to US$ 50 for remittances between individuals.

The measure, which ended up shelved, had the objective of taxing Chinese imports, which arrived in the country through remittances between individuals, to escape taxation.

Regarding the tax reform, Jorge Gonçalves Filho said that the sector supports the proposal.

Participating in the event were Frederico Trajano and Luiza Trajano, both from Magazine Luiza; Sérgio Herz, CEO of Livraria Cultura; Ronaldo Pereira Júnior, CEO of Ri Happy; McDonald’s vice president of government relations, Marlene Fernandez; Antonio Carlos Pipponzi; chairman of the board of directors of Raia Drogasil; Artur Grynbaum, from Grupo Boticário; between others.

The meeting with the sector takes place after the Senate commission approved the extension of the payroll exemption for 17 sectors, a measure that has been facing resistance from the team of Minister Fernando Haddad.

According to Gonçalves Filho and Alckmin, the issue was not discussed at the Planalto meeting this Wednesday.