Maílson da Nóbrega interview: “The Selic rate is compatible with inflation expectations”

Roberto Dardis – How do you see our economy today with interest rates of 13.75%? Is blaming only the BC for these interest rates right?

Maílson da Nóbrega – The Selic rate is compatible with inflation expectations. It certainly helps to slow down economic activity, but this is the natural consequence of any monetary policy aimed at combating price increases. The Selic rate reflects the low power of monetary policy, which influences only 60% of the credit supply in the economy, and the perilous fiscal situation. The criticisms that the Central Bank has been receiving seem to result from ideological views and gross ignorance of how a modern central bank works, particularly in the key issue of inflation.

RD – With a high public debt and the government not saving, is a tax increase imminent? Or do we have other ways out?

MN – The government can hardly save, as it has less than 10% of federal primary spending to carry out all discretionary spending. This tends to worsen the vegetative growth of mandatory expenditures and with the government’s decision to grant real increases in the minimum wage, which readjusts three of each social security benefit, and to recompose civil service salaries. The world average of Budget availability is 50%.

RD – With low growth, inflation still outside the target and high interest rates, and without a viable economic project (fiscal framework/tax reform), what would be the way out for the government to return to a surplus in its accounts?

MN – It is unlikely that the government will resort to raising tax rates. It is promised to reinforce the collection with the elimination of tax expenses, but it is a difficult task, mainly because it does not include the tax benefits of Simples, the Free Zone of Manaus and non-profit institutions. Similar proposals failed in the recent past.

RD – Even knowing that we need general reforms, many flee from this hornet’s nest, but the country is lagging behind without them… what is our way out?

MN – The way out is to propose reforms that increase innovation and productivity in the economy, as well as those that improve the quality of education when compared to other countries. Brazil spends 6.3% of GDP on education, more than rich countries (5.6% of GDP), but it has failed to provide quality education, particularly in primary and secondary education.