Haddad praises Congress and charges Central Bank after S&P decision

The improvement in the outlook for the Brazilian public debt rating, disclosed this Wednesday (14th) by the rating agency Standard & Poor’s (S&P), is due to the harmony between the Powers, said the Minister of Finance, Fernando Haddad. According to him, the National Congress and the Federal Supreme Court (STF) play an important role in S&P’s decision, but the Central Bank (BC) needs to “join the effort” and start reducing interest rates.

The minister recalled that the S&P communiqué cited discussions on the new fiscal framework and tax reform as one of the reasons that led the agency to confirm the possibility of improving Brazil’s rating over the next two years. He thanked the presidents of the Chamber of Deputies, Arthur Lira (PP-AL), and of the Senate, Rodrigo Pacheco (PSD-MG), for their effort in consolidating public accounts.

“There is a lot of work ahead. It’s just a start, but if we maintain the work rhythms of the Houses (of Congress) and of the Judiciary, we will reach our objectives. Brazil has to grow again. I think that the harmony between the Powers has contributed to this result, it is a change of bias and route, it is very significant”, declared the minister.

For the minister, the action of the BC is now important, with the reduction of interest rates. “I was talking about harmonization. The Central Bank is missing to join this effort, but I want to believe that we are on the verge of seeing this happen. When we are all aligned, we will prosper,” he declared.

Next week, the Monetary Policy Committee (Copom) will meet to decide on the Selic rate (basic interest rates for the economy). Currently, the rate stands at 13.75% per year, at the highest level since January 2017. Despite having classified the tone of some minutes of recent Copom meetings as harsh, the minister said that the monetary authority is becoming sensitive to the requests from industry and retail to start reducing interest rates.

“I want, as soon as possible, to thank the monetary authority, which in each statement demonstrates that it is sensitive to the clamor of the business community, banks, risk agencies and that it is possible for harmony to be even greater”, said Haddad, citing a meeting earlier with the Institute for Retail Development (IDV).

investment grade

Regarding a possible return to investment grade, a guarantee that the country does not run the risk of defaulting on its public debt, Haddad said that he believes in the resumption of the good payer seal. “Brazil will resume”, declared the minister, recalling that the country is currently growing more and having lower inflation than several developed countries.

Brazil obtained the investment grade in 2008, in the second term of the government of President Luiz Inácio Lula da Silva. The country lost the seal in 2015, in the second term of President Dilma Rousseff. Currently, S&P awards Brazil a BB- ​​rating, three notches below investment grade.

Through its press office, the Central Bank informed that it will not comment on the S&P decision nor on the statements by Minister Fernando Haddad.