BRASÍLIA – Conversations about succession in central bank they are already running fast and involving the president Roberto Campos Neto, who has been suggesting behind the scenes more time to complete the change of command at the institution – in other words, that the announcement of the new name be made sooner. His term ends on December 31, in the first replacement under the BC’s fixed term system, which began in 2021. The appointment is up to the president Luiz Inácio Lula da Silva.
In private conversations, Campos Neto has been arguing that the chosen successor must leave in time for the hearings, carried out by the Senate, occur in 2024, which sets the deadline for the months of October or November. His interlocutors, however, state that the BC president is already working with a longer term and intends to dedicate the entire second semester to a “smooth and collaborative” transition.
At Faria Lima, the change of command at the BC has been a topic since last year, when Lula opened fire on Campos Neto for the high interest rate in force (13.75% per year, at the time). The beginning of the cycle of cuts, in August, cooled the criticism, which returned more recently in speeches by the president of the PT, Gleisi HoffmannIt’s from Minister of Labor, Luiz Marinho.
Analysts’ fear is not so much about the effects this could have on the current president of the BC, but about the ability of the next occupant of the position to resist pressure from Palácio do Planalto and the PT. Campos Neto has already demonstrated independence; it will be up to the successor to prove its position to the market.
The favorite for succession is still Gabriel Galípoloan economist who ran Banco Fator and who joined Lula’s 2022 election campaign at the hands of the PT – he accompanied Gleisi Hoffmann at events with investors and analysts, as a kind of economic spokesperson for the PT member.
When assembling the government, Galípolo ended up assuming the position of number 2 of Minister of Finance, Fernando Haddadbut not before having been considered for solo flight positions, such as the presidency of BNDES.
The direct contact he established with Lula, both in the campaign and in the government, qualified the economist for the appointment to the position of director of Monetary Policy at BCin May last year, even though his professional career is not close to the topic.
At that moment, the analysis that the nominee was placed in the post by Lula with a view to succeeding Campos Neto took shape in Brasília. But not only that: as an inspector of the conduct of the current president of the BC – seen, by Lula’s allies, as an infiltrated Bolsonarista.
The events that followed – Galípolo’s agreement with the decisions of Campos Neto and the BC board – did not go unnoticed in the eyes of sectors of the PT. They wonder how “one of our men” did not oppose the project for the institution’s financial autonomy, which came to life in the Senate; nor did it register divergences regarding positions considered conservative in the management of interest rates.
In an interview with Sheet At the beginning of March, Campos Neto revealed that support for the BC’s financial autonomy proposal is unanimous within the board. A large part of the PT has already demonstrated that it is against the idea, which also faces resistance in the National treasure and in the Ministry of Management, of Esther Dweck – who see obstacles in technical issues, such as the impact on public debt and how to give autonomy to an autarchy with so many State responsibilities.
A report must be presented by senator Plínio Valério (PSDB-AM). Campos Neto was directly involved in the discussion of the text, but has been advised to distance himself, as the debate should not be concluded during his mandate. And the eventual benefits – that is, the ability to hire and retain good quality technicians – will also be left to the next president.
Time closed and Galípolo apparently understood the message. In recent weeks, he appeared at two consecutive PT events in the capital: the birthday of former minister José Dirceu and that of Paulo Pimenta, Planalto’s Communications Secretary.
In conversations with party politicians, according to the Estadão, there was no shortage of questions about inflation and its relationship with interest rates. Neither the PT members nor the president are satisfied with the current Selic level (10.75% per year).
Galípolo did not publicly comment on the BC’s financial autonomy. But in private conversations, according to reports, he has said that the discussion was hasty, that it would need to involve bank employees, the government and the Legislature, and that there is an impact on public accounting that must be considered.
The chairman of the board of directors of Jive Investments, Luiz Fernando Figueiredo, who was director of the BC between 1999 and 2003, assesses that the PT’s narrative has not been confirmed in practice. He cites as an example Lula’s decision, last year, to maintain the inflation target at 3% – Galípolo acted directly to convince the president at the time.
“We have doubts, of course we have doubts, we don’t know who the person will be (who will replace Campos Neto). But what we have of evidence, so far, is not bad”, said Figueiredo. “Common sense has prevailed in concrete attitudes: the inflation target, the hiring for the BC board, Roberto Campos’ own relationship with Haddad. The signs are positive. There is doubt, yes. And it exists mainly because there is a narrative from the president that has generated discomfort.”
The economist attributes this discomfort to Lula’s interventionist speeches, which caused the devaluation of shares in state-owned companies, such as Petrobras, and privatized companies, such as Vale and Eletrobras. According to him, foreign investors have already taken R$22 billion from the country this year, largely in response to Brasília’s advance on companies.
In a recent interview with Estadãoeconomist José Júlio Senna, former director of the BC (1985) and now head of the Center for Monetary Studies at the Brazilian Institute of Economics at Fundação Getulio Vargas, said that the uncertainties about the exchange at the BC add to the doubts about fiscal policy. And this interferes with investors’ perception of economic indicators.
“We still don’t have full confidence that public accounts will be well balanced in the future. Another point is the uncertainty related to the change of command at the Central Bank at the end of the year. I am not going into the merits of the qualifications of individuals. But market analysts are unsure about the continuity of monetary policy,” said Senna.
“These uncertainties make expectations (inflation) remain at 3.5%. This is a major obstacle to reducing interest rates. If expectations do not converge, the BC has to practice a tighter monetary policy.”
The economic team still does not see any interference from the BC succession on asset prices, such as a greater demand for bonds linked to inflation. Even though the issue has swept the financial market, the assessment is that, despite the speeches, investors do not see a future of leniency with price indices.
The turbulence tends to increase in the coming months, with the end of Campos Neto’s term approaching and the realization that, in addition to him, two other directors will be replaced – at the end of the year, the terms of Carolina Barros, director of Relationships, Citizenship, will expire and Conduct Supervision, and Otávio Damaso, director of Regulation.
In this way, one third of the board – which is made up of eight members plus the president – will be changed. Lula’s nominees – or “ours”, in the PT’s definition – will then become the majority on the council.
Although a favorite and close to Haddad, Galípolo started to compete with other names that circulate in behind-the-scenes conversations. The experienced economist Marcelo Kayath, who was director of Credit Suisse and is a friend of the minister, is one of them.
The Genial/Quest survey with financial market analysts released on the 20th showed that, at least for Faria Lima voters, the director of International Affairs and Risk Management, Paulo Picchetti, is the favorite for the vacancy.
He appeared ahead of Galípolo and Kayath in the question of who should be nominated for Campos Neto’s place. The only voter in this succession, however, is President Lula, who has the legal power to nominate the new president of the BC.
When contacted, Campos Neto, Haddad and Galípolo did not speak out. Kayath said he would not comment.
Tags: Transition start sooner Campos Neto talks smooth collaborative process
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