Senate plenary approves new Central Bank directors

The Senate plenary approved early this Tuesday night (4) the nominations of Gabriel Galípolo and Ailton Aquino for directors of the Central Bank (BC). Future Director of Monetary Policy, Galípolo had 39 votes in favor and 12 against. Appointed to the Supervisory Board, Aquino received 42 votes in favor and 10 against. There was one abstention on both votes.

The names had been approved earlier by the Senate Economic Affairs Committee (CAE), which questioned the two nominees. Galípolo and Aquino are the first directors appointed by President Luiz Inácio Lula da Silva.

The investiture of the two new directors still depends on formal procedures. First, the Senate will have to send a communication to the Presidency of the Republic informing the approval. Afterwards, the nominations will be published in the Official Gazette of the Union so that, only then, will the BC mark the inauguration ceremony.

The two new directors, the first to be appointed by the current government, will participate in the next meeting of the Monetary Policy Committee (Copom), in the first week of August. Originally, the sabbatine and the vote in plenary would take place on the last 27th, but they were postponed by a week.

Sabbath

During the sabbath, Galípolo defended the current agenda of economic reforms, such as the new fiscal framework and tax reform, and said that the best solution to control the Brazilian public debt is to make the economy grow more. This path, he declared, would increase the potential Gross Domestic Product (GDP), maximum production that does not increase inflation, and would reduce the equilibrium interest rate, the rate necessary to hold prices and neither stimulate nor discourage economic activity.

“If we continue with assumptions of potential growth of 1.5% or 1.6% and a neutral interest rate of 4.5%, no matter how sophisticated the economists’ models are, the (public) debt/ GDP will not perform well. The only solution, as Roberto Campos Neto (president of the BC) also said, is to grow, and to grow it is necessary to continue with the economic agenda faced now”, declared Galípolo at the beginning of the interview.

Regarding the criticisms by President Luiz Inácio Lula da Silva and the Minister of Finance, Fernando Haddad, of the current basic interest rate, at 13.75% per year, the future director stated that the public debate cannot be prohibited. For Galípolo, a discussion on the movements of the economy is necessary, both in the technical sphere and in the political sphere. “

“It is not up to any economist, no matter how excellent he may be, to impose what he understands to be the economic destiny of the country in spite of the democratic will and its elected representatives, who are you (senators)”, commented Galípolo.

A career BC servant and the first black person to hold a director position in the body, Aquino said he is committed to the objectives of the monetary authority, which consists of guaranteeing price stability, financial system security, reducing volatility in the economy and the promotion of full employment (rate at which the labor market has the least possible unemployment rate).

The new Inspection director also stated that he was optimistic about the Brazilian economy, highlighting the drop in inflation expectations and the recent increases in estimates of GDP growth in 2023.

Profile of nominees

Galípolo will replace former director Bruno Serra Fernandes, discharged at the end of March. Until now, the Director of Economic Policy, Diogo Guillem, accumulated the Directorship of Monetary Policy.

Ailton Aquino dos Santos will replace Paulo Sérgio Neves de Souza. Since March, Souza has occupied the Supervisory Board on an interim basis until the new director takes office.

Exonerated two weeks ago of the Executive Secretariat of the Ministry of Finance, Galípolo was the second name in the portfolio below Minister Haddad from January to June. Former secretary of Economy and Transport of the state government of São Paulo, the new director of Monetary Policy also worked at the Federation of Industries of the State of São Paulo (Fiesp), at the Brazilian Center for International Relations and at Banco Fator.

BC’s career server since 1998, Ailton Aquino Santos has worked in several departments within the institution, where he became chief auditor. Traditionally, the Board of Inspection is granted to a civil servant of the body.

Mandates

The Collegiate Board of the Central Bank is made up of the president and eight directors. according to Complementary Law No. 179 of 2021, which established the autonomy of the Central Bank, the mandates are fixed and last for four years, and may be renewed only once. In the case of Galípolo and Aquino, the mandates go up to 2027, and may reach 2031.

The terms of office of the president of the BC and of two directors begin on January 1 of the third year in office of the President of the Republic. Two directors take office on March 1 of the president’s first year, two on January 1 of the second year, and finally two on January 1 of the fourth year.

Dnit

The Senate plenary will vote this Wednesday (5th), starting at 4 pm, on an urgent basis, to nominate four new directors of the National Department of Transport Infrastructure (Dnit), whose names were approved earlier by the Infrastructure Commission of the House.

In addition to the new general director of Dnit, Fabricio de Oliveira Galvão, the plenary will vote on the nomination of the executive director, Carlos Antonio Rocha de Barros; and the Railway Infrastructure directors, José Eduardo Guidi; and Road Infrastructure, Fabio Pessoa da Silva Nunes.