By Silvio Cascione and Marcela Ayres
BRASILIA (Reuters) – Brazil’s government is not discussing changes to a new benchmark interest rate proposed for state development bank BNDES despite recent criticism by the bank’s recently appointed president, Planning Minister Dyogo Oliveira told Reuters on Monday.
Two BNDES directors resigned last week after BNDES head Paulo Rabello de Castro said the new benchmark, announced two months before he took the reins of the bank in May, could be less predictable for borrowers than the current government-set rates because it would be linked to market rates.
BNDES, the main provider of long-term corporate loans in Brazil, has offered subsidized loans for decades in an effort to boost economic growth and create jobs.
Rising public debt and increased scrutiny of the bank’s lending policies after recent corruption scandals have led policymakers to propose changes to boost transparency, such as the new market-based benchmark.
The shift began last year with former BNDES chief Maria Silva Bastos Marques, who resigned in May citing personal reasons. She was heavily criticized by industry lobbies and many lawmakers for curbing lending even as the economy struggled to emerge from recession.
Oliveira nevertheless said she did a very good job and that new BNDES chief Rabello de Castro was maintaining most of her advances, while trying to streamline project approvals.
“BNDES is a transatlantic ship. It does not change its policies overnight,” Oliveira said.
He added that while lawmakers could suggest changes to the new BNDES benchmark rate, the government was working toward its approval.
“We will have a very respectful discussion with Congress. What is important to say is that there are no discussions within the government about changing the proposal,” Oliveira said.
According to the government’s proposal, the TLP rate will be linked to the IPCA inflation index and to the returns of local inflation-linked bonds. The old benchmark, the TJLP rate, which is set every three months by policymakers, currently stands at 7 percent, lower than the central bank’s base 10.25 percent rate.
The minister said he called Rabello de Castro on Friday to discuss the new benchmark. Asked if the new benchmark could be linked to the official inflation target, as suggested by Rabello de Castro according to Valor newspaper, Oliveira said the idea had not been discussed.
(Reporting by Silvio Cascione and Marcela Ayres; Editing by Bernard Orr and Cynthia Osterman)