A Stronger Role of BNDES May Further Impact the Effectiveness of Selic Against Inflation

Written by Bruno Teles

Published on 06/02/2023 at 17:30

BNDES (Foto/divulgação)

Seja o primeiro a reagir!

The Return of Any Strengthening Strategy for the National Bank for Economic and Social Development (BNDES) May Lead to a Reduction in the Effectiveness of Monetary Policy and Still Be Another Negative Element for the Challenges of the Central Bank (BC).

“The impact of operations with subsidized rates will be greater or lesser depending on the volume of resources (that will be offered by BNDES)” said the former director of the BC and now member of the board of BRF, Engepar, and Cielo, Aldo Mendes.

“If the volume of subsidized credit is significantly increased, there will be a reduction in the power of monetary policy, and this will require higher real interest rates,” stated the former president of the BC and now chairman of the board at Jive Investments, Luiz Fernando.

In the last two weeks, there have been several statements from government members with the intention of expanding operations at this development bank, with the new CFO of BNDES, Alexandre Abreu, signaling the possibility of the bank adjusting the disbursement volume from 0.7% of the Gross Domestic Product (GDP) to something around 2% of GDP.

ARTICLE CONTINUES BELOW

BNDES: Partnership Between Brazil and Germany

The new president, during his first trip abroad as head of state, also stated that the development bank will resume financing engineering projects to help Brazilian companies overseas.

Selic Rate

Credit is one of the main channels through which monetary policy affects economic prices, as changes in the Selic Rate further impacts borrowing costs, inhibiting all investment and consumption.

However, the size of the entire subsidized credit portion alters the reach of monetary policy. According to another former BC member, who preferred to remain anonymous, one of the significant risks would be a change in the current rate charged on BNDES financing, the Long-Term Rate (TLP), back to the previous Long-Term Interest Rate (TJLP), which was still set by the government. Thus, if the bank raises funds at market rates and still lends all this funding at a lower interest rate like it used to with the TJLP, this difference would have to be covered by the National Treasury.

BNDES director Abreu stated that one of the paths is the combination of international fundraising with lower rates and domestic fundraising with higher rates. The utilization of resources from the Worker Support Fund (FAT) could also bring the TLP even closer to the Selic rate.

Figueiredo also asserted that, when BNDES reduced its financing activities for large companies using all the subsidized money, there was still a positive reflection on the entire monetary policy. “This helped to have a longer period with very low interest rates,” he affirmed.

A Stronger Role of BNDES May Further Impact the Effectiveness of Selic Against Inflation

The Return of Any Strengthening Strategy for the National Bank for Economic and Social Development (BNDES) May Lead to a Reduction in the Effectiveness of Monetary Policy and Still Be Another Negative Element for the Challenges of the Central Bank (BC).

BNDES: Partnership Between Brazil and Germany

Selic Rate

Is a smart plug worth it in a regular home? What does it offer: turns on and off via smartphone, creates routines by schedule, prevents forgotten devices, sometimes monitors consumption, and improves habits without renovation or miracles.

Geographers redefine the Brazilian relief and confirm the presence of mountains in 14 states with a new system that changes historical criteria and alters the way the territory is classified.

There is a city in China right next to Hong Kong where people speak Portuguese, the streets have names in Portuguese, and the architecture looks like it came straight out of a historic city in Brazil.

At over 8,800 meters above sea level, the summit of Mount Everest is made up of rocks that originated at the bottom of an ocean about 500 million years ago and were pushed to the highest point on Earth by the collision of tectonic plates.

Milei’s government launches surprise police operations on the streets of Argentina to hunt undocumented immigrants, but the government’s own data reveals that only 4% were irregular. Critics say it is a copy of Trump’s policy without real necessity.

Billion-dollar partnership in clean energy: The advancement of decarbonization in Japan opens doors for Brazil to become the world’s largest supplier of green hydrogen and ammonia.

Milei’s government launches surprise police operations on the streets of Argentina to hunt undocumented immigrants, but the government’s own data reveals that only 4% were irregular. Critics say it is a copy of Trump’s policy without real necessity.

Indonesia is the largest producer of tropical seaweed in the world, and this market is already worth billions of dollars, but 90% of the production goes directly to China as raw material. Now the country wants to change the game and process everything on its own.

Scientists use artificial intelligence to create nearly indestructible steel that does not rust and could change the way industrial energy and oil parts are produced.

This extremely contagious virus has already affected 90% of the population of Brazil and has no cure.

Electrolux surprises, closes colossal factory and lays off 400 people in a mass dismissal that will have a direct effect later this year, following a cost review, with an impact of R$ 272.5 million and R$ 109 million in cash in Chile.

A Stronger Role of BNDES May Further Impact the Effectiveness of Selic Against Inflation

The Return of Any Strengthening Strategy for the National Bank for Economic and Social Development (BNDES) May Lead to a Reduction in the Effectiveness of Monetary Policy and Still Be Another Negative Element for the Challenges of the Central Bank (BC).

BNDES: Partnership Between Brazil and Germany

Selic Rate

Is a smart plug worth it in a regular home? What does it offer: turns on and off via smartphone, creates routines by schedule, prevents forgotten devices, sometimes monitors consumption, and improves habits without renovation or miracles.

Geographers redefine the Brazilian relief and confirm the presence of mountains in 14 states with a new system that changes historical criteria and alters the way the territory is classified.

There is a city in China right next to Hong Kong where people speak Portuguese, the streets have names in Portuguese, and the architecture looks like it came straight out of a historic city in Brazil.

At over 8,800 meters above sea level, the summit of Mount Everest is made up of rocks that originated at the bottom of an ocean about 500 million years ago and were pushed to the highest point on Earth by the collision of tectonic plates.

Milei’s government launches surprise police operations on the streets of Argentina to hunt undocumented immigrants, but the government’s own data reveals that only 4% were irregular. Critics say it is a copy of Trump’s policy without real necessity.

Billion-dollar partnership in clean energy: The advancement of decarbonization in Japan opens doors for Brazil to become the world’s largest supplier of green hydrogen and ammonia.

Electrolux surprises, closes colossal factory and lays off 400 people in a mass dismissal that will have a direct effect later this year, following a cost review, with an impact of R$ 272.5 million and R$ 109 million in cash in Chile.

The Lula government is pursuing re-election and is therefore preparing a package with discounts of up to 80% on debts, subsidies for diesel, gas for 15 million, and energy, after reaching 51% disapproval six months before the election.

The chamber approves a project that transforms plots of up to 2,000 square meters into official rural properties, allowing thousands of small producers who were invisible to the government to now access credit, tax exemptions, and technical assistance.

Factory 52, in the USA, cost over $5 billion, covers 270,000 square meters, and manufactures cutting-edge chips: it was named Project of the Year by the world’s largest engineering magazine, marking the global race for semiconductors.

While BYD lays off 100,000 in China due to falling profits, the factory in Brazil remains strong: the unit in Camaçari, Bahia, could generate up to 20,000 jobs and become an export hub for all of Latin America.

Milei’s government launches surprise police operations on the streets of Argentina to hunt undocumented immigrants, but the government’s own data reveals that only 4% were irregular. Critics say it is a copy of Trump’s policy without real necessity.

Indonesia is the largest producer of tropical seaweed in the world, and this market is already worth billions of dollars, but 90% of the production goes directly to China as raw material. Now the country wants to change the game and process everything on its own.

Scientists use artificial intelligence to create nearly indestructible steel that does not rust and could change the way industrial energy and oil parts are produced.

This extremely contagious virus has already affected 90% of the population of Brazil and has no cure.

Electrolux surprises, closes colossal factory and lays off 400 people in a mass dismissal that will have a direct effect later this year, following a cost review, with an impact of R$ 272.5 million and R$ 109 million in cash in Chile.