Bolsonaro: $27 bi to be spared after cut in benchmark interest

President Jair Bolsonaro said today (Dec. 20) that the reduction in Brazil’s benchmark interest rate, the Selic, will result in $27 billion in public coffers being spared. This week, after a meeting of the Monetary Policy Committee (Copom), the Central Bank decided to cut the Selic rate by 0.5 percentage points to 4.5 percent—an all-time low.

“Next year, because of the [reduction in] the Selic rate, we’re paying [$27 billion] less in interest alone. We’re restoring Brazil. It’s not easy,” the president said after leaving the presidential residence this morning.

Selic is the main tool used by the Central Bank to curb the inflation. When its reduces the Selic rate, credit tends to become cheaper, encouraging production and consumption.

New interest

When asked about whether the government’s economic staff could create a new interest modality on electronic bank operations, Bolsonaro said the matter is still to be settled, adding that the government plans to replace and simplify taxes.

“Whether [Economy Minister Paulo Guedes] is studying [the matter], I haven’t been told. What he really wants is to replace taxes, to simplify this cobweb of taxes, because it’s hard to be a boss in Brazil. Any inspector visiting your company can find a way to fine you. You have to be a hero if you want to run your business here. You have to have superpowers to dodge inspections,” the president said.