The Minister of Finance, Dario Durigan, stated, in an interview with Hour H this Thursday (21), that the interest rates charged in Brazil are not “civilized”. The economics analyst at CNN Lucinda Pinto commented on the matter and highlighted that the cost of Brazilian debt is higher than other countries.
In the interview, Durigan said that he agrees that, in Brazil, the “”. It’s something that bothers me a lot to see our debt being rolled over in interest at this level,” he said.
For Durigan, the high interest rate in the country has multiple explanations and cannot be attributed solely to the level of government spending. “I’ve been saying that there is a very easy answer given by some economists who are openly opposed to the government, which is that the government spends a lot, that’s why , which is not true,” he declared.
According to him, the fiscal factor is part of the explanation, but it is not the only reason.
Analyst Lucinda Pinto, however, considered that Durigan avoids answering the impact of additional government spending on inflation and, consequently, on the interest rate.
The analyst highlighted that the economic stimulus measures adopted throughout the year amount to between R$150 billion and R$200 billion.
“According to XP’s calculations, this additional spending has an impact on GDP of 1.4 percentage points,” he explained. “The point is that economic growth, additional consumption, this generates inflation. So, yes, there is an effect on interest rates,” added Lucinda.
Lucinda also highlighted that the effect becomes a kind of snowball: higher interest rates increase the cost of the debt that the government carries and rolls over periodically.
“The cost of our debt, because of the interest rate, is higher than that of other countries,” said the analyst, refuting Durigan’s argument that other nations, including emerging and developed ones, also carry high debts.
War as a backdrop and autonomy of the Central Bank
Durigan also mentioned what is behind current inflation. Lucinda partially agreed, but highlighted that other elements contribute to the scenario.
The analyst recalled that government spending to try to contain the impact of rising fuel prices on people’s lives also ends up resulting in inflation, creating a paradox that, according to her, the minister is unable to explain clearly.
In another part of the interview, Durigan defended the autonomy of the Central Bank, but expressed reservations regarding the text of a PEC presented to the Constitution and Justice Commission. “I see a way out, yes, for us to give more financial and operational autonomy to the Central Bank, but I see some problems in the last text that was presented at the CCJ,” he said.
Lucinda highlighted the urgency of the issue, pointing out that the Central Bank faces a shortage of labor and investments in technological tools, such as artificial intelligence, necessary to supervise an increasingly complex and agile financial system. “Indeed, the Central Bank needs to be strengthened”, concluded the analyst.
