Padilha: contingency planning is an unknown word.

“If we analyze all the indicators, we will see that Brazilian economists are showing that we will inevitably have a drop in interest rates. This also pleases the president, and he views it favorably, if we can, but we will have to fully respect the autonomy of the Central Bank, and meet this expectation, including that of professionals in the sector. It is the economists and rating agencies that are saying that interest rates will fall. The president views it very favorably, but the final word is with the Central Bank,” Padilha emphasized in a press conference at the Planalto Palace.

Tonight, the decision on the Selic rate will be announced at the first meeting of the Monetary Policy Committee (Copom) under the leadership of the new president of the Central Bank, Ilan Goldfajn.

Financial institutions consulted by the Central Bank are waiting for Selic maintenance The benchmark interest rate was set at 14,25% per year at this week's Copom meeting. However, the expectation is for a reduction in the basic interest rate by the end of the year. According to projections, the Selic rate will be at 13,25% per year by the end of 2016. In 2017, further cuts in the Selic rate are expected, ending the period at 11% per year.

Contingency

Padilha emphasized that the economic team is not currently considering the possibility of further budget cuts. “The government is working within its minimum limits, but certainly we have some leeway in certain areas where we intend to increase efforts, to do more with less. This would be fundamental to avoid further budget cuts. The government will exhaust all alternatives to prevent any further cuts.”

In a meeting to discuss measures to stimulate the resumption of the country's economic growth, interim president Michel Temer and ministers yesterday (19) analyzed scenarios and figures for the economyTemer has ordered the economic team to reconvene in 15 days.

The Temer government is working with an estimated primary deficit of R$ 170,5 billion for 2016. This projection exceeds the deficit of R$ 96,7 billion reported in March by the economic team of the ousted president Dilma Rousseff.

Debt securitization

One of the measures being studied to obtain more resources is the securitization of the federal government's outstanding debt. "Debt securitization is one of the alternatives that may or may not be adopted," said Padilha.

The government intends to support a draft law that allows the sale on the market of part of tax debts and debts registered as outstanding debts that have been paid in installments by taxpayers.Called securitization, the process allows the government to sell up to R$ 60 billion of its debts, which are being paid in installments to the federal government, on the market. The total amount of these debts is estimated at R$ 1,5 trillion. The debts are converted into shares of a credit fund that will be put up for sale on the market. The bill authorizing the government to use this mechanism to bolster its coffers is currently being processed in the Senate.

Refurbishment

Regarding priorities for this year, the Chief of Staff said that the government needs to approve the proposed constitutional amendment (PEC) that limits public spending still in 2016. "The government has to approve the spending cap this year; the government wants to approve the pension reform first, the labor reform, the tax reform, and lastly, a reform in the efficient provision of state services," added Padilha.

According to the minister, political reform is also not excluded from the agenda. “These are issues that are already in the National Congress. Don't think about a major reform in any of these areas. The reforms will be topical so that approval is feasible this year. We will work on what is possible and provides an immediate response to Brazilian society,” he added.