Setubal criticizes Mantega, but predicts Dilma will be re-elected.
The owner of Itaú Unibanco, banker Roberto Setubal, who until recently was one of the main figures in the opposition, is moderating his criticism of the government; now, he states that President Dilma Rousseff is the favorite in the 2014 election and says that neither she nor her opponents, Aécio Neves and Eduardo Campos, would cause problems for the so-called "market"; however, he criticizes the economic policy of Minister Guido Mantega and states that it is time to shift from consumption to investment; Setubal also attacked the BNDES (Brazilian Development Bank): "it is impossible to compete with these subsidized rates".
247 - Banker Roberto Setubal, owner of Itaú Unibanco, remains in the opposition camp, but has moderated his criticism of the federal government. He, who until recently was seen as one of the main articulators of the opposition discourse, influencing even the coverage of foreign publications such as The Economist and the Financial Times about Brazil, seems willing to moderate his criticism of the federal government.
This Sunday, in an interview with journalists Aguinaldo Novo and Cristina Alves, from Globo (read hereHe appears less dissatisfied with President Dilma Rousseff's government, especially after the auctions for airport and highway concessions, but still criticizes Minister Guido Mantega's economic policy and the BNDES's role in the economy.
Regarding the economy, one of his targets is fiscal policy. "Public spending in recent years has grown far more than revenue. Revenue has grown, even with some exemptions granted by the government, but expenses have grown much more. More rigorous control of public spending is absolutely necessary. We went through very calm times in the last decade, with public debt falling. Now, it's rising again," he says.
Although he doesn't directly mention Minister Mantega, he doesn't hide his displeasure with the economic policy.What we need to observe is that the government sought to stimulate the economy with public spending at a time when the economy and the international situation were not favorable. However, from now on, we cannot continue with this same policy; we have to reverse it, because it is impossible to imagine that we will continue to expand public spending above revenue. This equation doesn't add up. There was a stimulus to the economy through public spending, but this is not sustainable," he states.
Setubal also advocates for inflation to be at the center of the 4,5% target – which would mean higher interest rates."The target is 4,5%, we are within the tolerance range. Ideally, we would reach the target. The fact that we are not aiming for the target creates a perception that inflation, today, at 5%, 5,5%, is acceptable, which is not good," he states.
Another target is the BNDES."I think the BNDES has a role to play, I recognize that, but it should be more selective in the projects it finances. It's impossible to imagine that all investment in Brazil will be made by the BNDES; that's not possible. Otherwise, we would create a huge restriction on making investments. I think the BNDES should focus on projects that the market wouldn't naturally finance, projects of interest to the government, with very long-term returns," he says.
Despite the criticism, Setubal stated that there is no immediate risk of a reduction in Brazil's credit rating and said that the three candidates – President Dilma Rousseff (PT), Senator Aécio Neves (PSDB-MG), and Governor Eduardo Campos (PSB) – do not represent any problems."The scenario is calm from an investor's point of view. I don't expect any major volatility impact on the market. I think the most likely scenario is that President Dilma will be re-elected, given the current situation," he says.We have other candidates, Aécio (Neves) and (Eduardo) Campos, who from the market's point of view are also quite safe candidates. In this sense, I say there is no cause for concern.