"An interest rate of 13,75% is irresponsible for Brazil's growth," says the Minister of Agriculture in Beijing.

Silvano Mendes, RFI - Despite the contracts announced on the last day of the official program of the Brazilian delegation's visit to Beijing, this Wednesday, some figures coming from Brazil continue to provoke negative reactions in the Chinese capital. In his speech at the Brazil-China Economic Seminar, Carlos Fávaro complained about the interest rates practiced in the country. "It's a real disincentive," said the minister.

Fávaro refers to the announcement made by the Monetary Policy Committee (Copom) of the Central Bank (BC), which unanimously decided last week to maintain the basic interest rate – the Selic – at 13,75% per year. This measure keeps the rate at its highest level since December 2016.

At the end of the event in the Chinese capital, while speaking with journalists, he returned to the subject. After insisting that Brazil has a promising market, the minister made a point of cautioning Brazilians: “Given so many opportunities, entrepreneurs certainly need to invest, modernize their plants, and strengthen their opportunities to meet Chinese demand. [But] the interest rate in Brazil is prohibitive,” he stressed.

“The Central Bank, which is independent, is not showing this sensitivity. Under no circumstances would President Lula's government be irresponsible with inflation control and also with public spending. Not at all. Now we have controlled inflation, very controlled public spending. A new fiscal framework will be presented, a new tax reform will be presented to bring modernity and agility, transparency to Brazilian public accounts,” he recalled. “Therefore, basic interest rates of 13,75% are prohibitive for increasing our opportunities.”

According to Fávaro, the business community needs to complain. "It's important that they speak out as well. If they remain silent, the Central Bank can certainly continue with this irresponsible interest rate, which is detrimental to Brazil's growth," he concluded.

The government has been increasing pressure on the monetary authority to reduce the Selic rate. High interest rates make credit more expensive and, conversely, decrease consumption and investment.