The economic agenda became one of the main topics discussed in Brazil since that, in the last week, President Luiz Inácio Lula da Silva (Workers’ Party) started to publicly criticize the rise of the country’s benchmark Selic base interest rate by the central bank (also known as BC, in Portuguese), which is headed by Roberto Campos Neto, an economist appointed to the post by former President Jair Bolsonaro (Liberal Party).
The polling institute Genial/Quaest asked 2,016 Brazilians their opinion about if “Lula is right in trying to force the interest rate to decrease”. 76 percent said “yes”; 16 percent answered “no” and 8 percent did not know or declined to answer. The Selic rate, which is currently 13.75 percent, was determined by the BC’s unanimous decision and is used as a benchmark for all the other interest rates in the country, such as those that affect credits, financing and financial investments.
Popular demand
Last Tuesday (14), the president of the National Confederation of Financial Workers (Contraf, in Portuguese) Juvandia Moreira said that by keeping Selic at 13.75 percent per year, the BC is “acting against the Brazilian economy and trying to generate recession”. She attended an act at BC’s seat in Brasília, demanding the resignation of Campos Neto and the adoption of a policy to reduce the current interest level.
Contraf is linked to Unified Workers' Central (CUT, in Portuguese) and with popular movements such as the Popular Brazil Front (Frente Brasil Popular, in Portuguese) and People Without Fear Front (Frente Povo Sem Medo). The confederation heads the organization of other demonstrations about this issue that will take place in many Brazilian state capitals.
Brazil's high interest rate makes economic growth difficult and harms workers, according to the movement. Increasing Selic is the main approach used by the central bank to curb inflation. This argument, however, is refuted by financial trade union entities.
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“This [demand-pull inflation] is not happening. People have no jobs or wages. The average wage has dropped,” says Moreira. According to her, what is going to happen is a negative impact on economic growth. “These interest rates encourage people to live off their investments and real estate and discourage productive investments,” she said.
To Juvandia Moreira, housing credit programs such as Minha Casa, Minha Vida (My House, My Life) and agricultural production will keep being harmed by high interest rates. The president of Contraf also emphasizes that Brazil applies rates higher than those applied in the largest world economies and that the risk of default does not justify it.
“Brazil has a debt level around 70 percent of GDP, but it is internal debt, all in reais. The country has large reserves, so there is no risk at all,” she says.
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Another criticism is against BC’s autonomy – sanctioned in 2021 by Bolsonaro – which now grants a mandate to the president and directors of the bank. Currently, there is no political indication or correlation of forces in Parliament to review this autonomy.
“Society has to understand that BC is a public bank. It's a state-owned department that is trying to be bigger than the people. It has adopted a different direction in economic policy and that harms the Brazilian people. When people get it, Congress will change [its position],” Juvandia explained.
Federal deputies launch a campaign against the BC policy
Last Tuesday (14), progressive parliamentarians of the governing base launched the campaign “Drop Interest Rates Now” or #JurosBaixosJa, referring to the hashtag that will be used on social media platforms. Its goal is to coerce the BC to adopt a new monetary policy that favors workers and national economic development. The launch also marks the start of the group's attempt to get the 171 signatures necessary for creating the Parliamentary Front against Abusive Interest Rates.
Parliamentarians launched a campaign in the Chamber of Deputies and foresee a possible summoning of Campos Neto to give explanations to the House / Gustavo Bezerra/Workers' Party
The media debate on the topic in recent weeks is an attempt by federal representatives allied with the presidency to strengthen the chorus against Campos Neto's current policy, hoping to break through the political blockade made by parliamentarians opposed to the idea of revising the central bank's autonomy. Sanctioned during the Bolsonaro government, this autarchy management model is heavily rooted in Neoliberalism. That's why, back then, it had the support of a large portion of Congress. For example, the presidents of the Chamber of Deputies and the Senate - Arthur Lira and Rodrigo Pacheco - both opposed changing the measure.
Federal Deputy Lindbergh Farias (Workers’ Party, Rio de Janeiro state), responsible for articulating, in the Chamber of Deputies, the movement against the current rates, says the initiative intends to “dispute society.”
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“We will fight to show that interest rates are offensive and that Brazil cannot resume its economic growth with them. Of course, the campaign we are organizing will also have popular demands on its agenda. It’s impossible to accept a credit card with over 400 percent interest rate per year, an overdraft with more than 130 percent,” he exemplifies, mentioning the consequences of the problem.
The campaign presents some ways to spread the movement’s demands, including launching an online manifesto to collect signatures seeking to strengthen the protest. The idea of creating the Parliamentary Front against Abusive Interest Rates is part of the same context as another approach the campaign adopted.
Just like the other fronts in Congress, the group will probably have a symbolic role in boosting debates on the issue. In addition, it will try to give greater visibility to the agenda. The national president of the Workers’ Party, federal deputy Gleisi Hoffmann (Paraná state), draws attention to the recession projection for the country. Economist and former central bank chief André Lara Resende are among the group that has recently warned about this horizon. He has been critical of the interest rates charged by the bank.
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“Most countries have higher inflation rates than Brazil and negative interest rates. Why do interest rates in Brazil have to be 13.75 percent? These rates prevent economic investment and private investment, and consequently, credit is compromised. This directly affects the population, reducing the generation of jobs and income. We need to get out of this vicious circle,” said Gleisi.
Several fronts will be involved in the campaign. As well as the popular act that took place on Tuesday (14) at the Brazilian central bank, other acts are being scheduled. For instance, this Monday (13), the Workers’ Party national board approved a resolution proposing that Roberto Campos Neto be summoned to provide explanations to the plenary of the Chamber of Deputies. The measure is defended not just by Workers' Party parliamentarians, but also by politicians from other leftist parties that support the government, such as the Socialism and Freedom Party (PSOL), Brazilian Socialist Party (PSB), Labor Democratic Party (PDT), and Communist Party of Brazil (PCdoB).
“The elections showed what kind of project [voters] wanted for Brazil. The law that grants autonomy to BC also defines rules. It’s clear that the central bank and monetary policy have to generate jobs and growth. These distorted interest rates are completely disconnected with the world’s reality,” criticizes Jandira Feghali (PCdoB, Rio Janeiro state), when talking about the Campos Neto approach, which she classifies as a “boycott of the current government.”
Social justice
Federal deputy André Janones (Avante, Minas Gerais state) said that the financial system, the main beneficiary of the rise in interest rates, behaves as a “cancer” before the Brazilian society.
“We live in a very different situation in our country, which is [the following]: when things are good, everybody benefits from them; but when things are bad, only banks benefit. We are not asking people to abdicate their billionaire profits. We are just asking them to have a bit more conscience so that we can achieve long-awaited social justice.”
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The founder of the Citizen Debt Audit, Maria Lúcia Fattorelli, highlights that the current BC guidelines harm the democratization of investments in Brazil. “When we have high interest rates, money becomes too expensive, inaccessible. If they were low, all the people reading it could access low interest rates, and large investments could be made. Even people starting a small business, when they have capital and low interest rates, their profits – even small – cover the cost of the loan. This allows them to, for example, hire other people to help them,” he explains.
To Fattorelli, the current moment is propitious for reviewing the policy applied by BC. “This movement is fundamental because, for the first time, we have a president who has the courage to face one of the most serious problems in Brazil. If high interest rates are holding back the Brazilian economy, we need to change that.”
Edited by: Flávia Chacon
