Brazil trying to democratize credit despite high rates, minister says

Brazil trying to democratize credit despite high rates, minister says

SAO PAULO (Reuters) – Brazil‘s Finance Minister Fernando Haddad said on Monday the newly inaugurated government would move forward with measures to expand the availability of credit despite the country’s high benchmark interest rate, which he again criticized.

Speaking at an event hosted by Fiesp, Brazils biggest industry association, he cited eight proposed bills already in Congress that are “ready to be forwarded,” including one that modernizes guarantees for bank credit and should be voted on shortly in the Senate.

After meeting with central bank governor Roberto Campos Neto this morning, Haddad said he had committed to unloading all paralyzed central bank credit initiatives, without giving further details.

The minister, who insisted on the importance of consumer credit to boost economic activity, predicted that the popular Pix instant payment system would become a credit instrument starting this year.

He also said he favored a differentiated treatment to encourage companies and guarantee new players‘ entry into the credit market. Still, he mentioned the high level of Brazil’s benchmark interest rate Selic – currently at 13.75% – as an obstacle. The independent central bank meets this week for its policy decision.

“Obviously, we have the Selic issue, which is an obstacle for all of us. You can reduce the lending spreads, improve the guarantee system, but the Selic will always be an obstacle to a consistent reduction in interest rates and the democratization of credit,” he said.

Haddad stated that he will work towards a “virtuous balance” of the exchange rate and interest rates in the short term.

The minister, who defended a national reindustrialization that takes climate change into account, stressed that gas could play a role in accelerating the energy transition process that is being planned, adding the government has “a lot of interest” in pre-salt gas.

He also said that, by calibrating state-ruin oil company Petrobras pricing policy, ethanol would have a “natural development.”

(Reporting by Marcela Ayres in Brasilia; Editing by David Gregorio)

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