Central Bank spending

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By JOÃO CARLOS LOEBENS*

Without needing authorization, the BC will spend approximately 740 billion this year just on interest payments for a handful of ultra-rich

At the end of last year, it was necessary to approve the PEC of the Transition (amendment of the Constitution) to approve the expenditure of 145 billion in the year 2023.

The president of the Central Bank of Brazil, Roberto Campos Neto, without the need for a PEC or Law, will spend five times more in 2023 only on interest payments for a handful of ultra-rich, approximately 740 billion, equivalent to eight years of the Bolsa Family, paid for half a dozen rich people in a year. Where exactly is the Spending Ceiling (or cut)?

The president of the Central Bank, Roberto Campos Neto, flatly refuses to lower the absurdly high interest rates, one of the highest interest rates in the world! Real interest that guarantees gains to ultra-rich rentier speculators, without the need to produce anything, feeding on the financial siege created through public policy determined by the president of the Central Bank.

The current President of the Central Bank was appointed in 2021 by President Jair Bolsonaro, shortly after the approval of the Central Bank autonomy/independence law, providing for a four-year term that does not coincide with the term of office of the President of the Republic. He will remain in office until the end of 2024, in line with the previous government's economic policies.

Generally speaking, as the main difference in economic orientation, we could define the previous government of Jair Bolsonaro as oriented to public policies of income concentration (neoliberal), more aligned with the rich, and the government of current President Lula as oriented to public policies of (progressive) income distribution, more aligned with the poor.

Given a certain set of income or wealth of a country, called Gross Domestic Product (GDP), public policies that concentrate income make some earn more to the detriment of others, reaching the levels of half a dozen billionaires and millions of poor people, usually resulting in social insecurity due to hunger.

On the other hand, public income distribution policies avoid the abusive concentration of wealth in the hands of a few, achieving a more equal distribution of income, with fewer billionaires and less poor people, avoiding or reducing poverty, hunger and social insecurity.

In addition to the social insecurity factor more present in societies with high income concentration, the economic growth factor must also be mentioned, which depends a lot on the movement of the economy. The concentration of income in the hands of a few billionaires slows down the economy, as money is “sterilized” in the hands of a few. In terms of income distribution policies, families start to consume more, the economy heats up, generating development and economic growth, so desired and defended by all.

The Central Bank president's justification for creating and maintaining the highest interest rate in the world is false – it would be to reduce inflation. This justification would be true if the Brazilian population had excess income/money, with excessively high consumption. The reality is there in plain sight.

The absurd expenditure in 2023 of 740 billion in interest, to be paid with the taxes of the 200 million Brazilians for a handful of ultra-rich, including foreigners, will be lacking in State/society investments to generate economic growth and development. The public policy of the president (and team) of the Central Bank of setting and maintaining the highest real interest rates on the planet enriches half a dozen and impoverishes Brazil... or not?

Where is the Spending Ceiling?

*Joao Carlos Loebens is a doctoral student in economics and tax auditor at the State Revenue Service of Rio Grande do Sul.

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