Minister Rui Costa, from the Civil House, blamed the president of the Central Bank, Roberto Campos Neto, for the spike in the dollar price this Thursday (28) after the announcement of fiscal measures to cut spending by the government. According to him, the increase in the currency to R$6 at the day’s high was due to a “deliberate” action by the authority’s director.
“What cannot be done, which caused us indignation, is all this questioning today [do mercado] it was deliberately, in our opinion, motivated and ‘started’ by the current management of the Central Bank, which, in my opinion, in a political vision of boycotting the government, created a permanent feeling of instability”, said Rui Costa.
For him, who is one of Esplanada’s main ministers, the president of the Central Bank “goes outside of Brazil, he just keeps talking bad about Brazil. Every lecture that goes on talks bad about Brazil.”
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Throughout the day, the financial market rushed to the safety of the dollar, mainly after confirmation that the government intends to exempt Brazilians who earn up to R$5,000 from paying Income Tax. To compensate, monthly earnings above R$50,000 will be taxed.
These and other measures still need to pass through Congress – which also raised alarms of concern. This is because, although the other cut proposals have been well received, there is a fear that they will be dehydrated during processing and that, in the end, the target of R$70 billion in savings in two years will not be reached.
Rui Costa also said that the government is looking forward to the succession of Campos Neto, with the inauguration of Gabriel Galípolo – appointed by President Luiz Inácio Lula da Silva (PT) for the presidency of the Central Bank in January. The minister says that the authority will have a direction “that will adopt, autonomously, technically, with competence, with technical knowledge, the measures that need to be adopted”.
“We are counting down to have, not a Central Bank that looks at the Executive, but rather a Central Bank that looks at Brazil, run by those who live in Brazil and don’t live in Miami. For those who have their daughter, their family, residing in Brazil. For those who have hope in their personal and professional future, linked to Brazil and not abroad”, he said.
The minister, however, avoided commenting on whether the Central Bank should sell dollars to contain the rise in the American currency, but attributed the exchange rate volatility to the closure of the market in the United States due to a holiday. He explained that lower liquidity increases the market’s susceptibility to abrupt movements.
“The Brazilian market is small compared to the American one. […] When only the Brazilian market is open, any movement is much greater”, he explained.
Rui Costa also refuted criticism that the announcement of changes to Income Tax, such as the exemption for those earning up to R$5,000, would have contributed to a negative market reaction to the spending cuts announced by the government. According to him, this measure is not new and was part of Lula’s electoral campaign, reflecting the government’s commitment to predictability and legal certainty.
“The so-called market is not made up of uninformed people, of people who are influenced by the headline. The so-called market has technical advice, there are a lot of people working for it and they know the measures”, he argued.
The minister reinforced that the government is committed to the fiscal framework and that the dollar tends to stabilize when the market recognizes this commitment.
Regarding the composition of the new Central Bank board, Rui Costa stated that Lula will send the names of the nominees to the Senate in the coming days. In addition to Gabriel Galípolo, who will assume the presidency of the authority, those responsible for the areas of Monetary Policy, Regulation and Relationships, Citizenship and Conduct Supervision will be appointed.
“The president even spoke to Galípolo today that he will nominate him at the beginning of next week, a small ceremony here, to nominate Galípolo and I believe, perhaps, that day the name will be sent” , he completed.
