Acting President and Minister of Development, Industry, Commerce and Services (MDIC), Geraldo Alckmin, said this Monday (5) that it makes no sense for Brazil to still have one of the highest real interest rates in the world, even with solid fundamentals in the economy.
“There is no justification. We have the second highest real interest rate in the world and only lose to Russia, which is at war,” he said at the opening of the Brazil Steel Congress.
Among the solid fundamentals, Alckmin cited foreign exchange reserves of US$ 370 billion, legal security, an enormous consumer market and record exports.
Alckmin highlighted the importance of fiscal adjustment and said that the government will comply with the fiscal framework. The expectation is that, in this semester, there will be a reduction in the US and Brazilian interest rates, which will favor the growth of the national economy.
“The international market is facing great stress, which should be temporary. Brazil has the 6th largest population in the world, a strong domestic market, and tomorrow the export balance for January to July will be released with a record. We have foreign exchange reserves, and I am optimistic that the fiscal policy will be followed. Therefore, there is no reason for Brazil to have the second highest real interest rate in the world. This is very disruptive,” he said.
Last month, the Central Bank’s Monetary Policy Committee (Copom) unanimously decided to maintain the Selic ratethe basic interest rates of the economy, at 10.5% per year.
Steel industry
In his speech, he highlighted that the steel industry is “the industry of industries”, which has always been at the forefront of innovation. With the policy instituted by the Lula government, New Industry Brazil represents a step forward for economic and social development.
“There is no economic and social development without industries,” stated the acting president, emphasizing that in the coming days, Development Credit Letters (LCD) will be available on the market, which will reduce the cost of credit for industries.
These letters are like the ones already existing in the real estate and agricultural sectors (LCI and LCA, respectively), where individuals are exempt from paying income tax when they invest in this title.
Alckmin highlighted that, by 2028, Brazil will receive investments of R$100 billion under the Mover Program, for decarbonizing the industry, and highlighted that the country emits 55% of carbon dioxide, a percentage well below that of other countries, thanks to its energy potential.
According to the Brazilian Steel Institute, Brazilian crude steel production reached 16.4 million tons in the first half of 2024, a growth of 2.4% compared to the same period last year. From January to December 2023, production was 31.9 million tons, when there was a drop of 6.5% compared to 2022.
