Gov't wants to lower cost of credit in Brazil

In a statement made today (Feb. 7), Central Bank president Ilan Goldfajn said the government wants to lower the cost of credit in both the short and long terms, in a “structural” and “sustainable” way. Goldfajn took part in the Painel Projeto Spread Bancário, held at the Central Bank headquarters in Brasília, to discuss the current cost of credit in the country.

“By structural [I mean] measures that actually lead to a decline in the cost; sustainable means we no longer want whimsical experiments that bring about a reduction quickly followed by another rise, as we know all too well,” he said.

Goldfajn stated that the reduction in the spread comes as part of the government's microeconomic reforms to boost the efficiency and the productivity in the economy. He added that a work group has been created to discuss the topic, and that measures will be unveiled as soon as they are “minimally ripe.”

He stated that the average spread for 2011-2016 was made up of 53.5% of insolvency, 23.8% of profits, 5.1% of administrative costs, 15.8% of direct taxes, and 1.8% of reserve requirements and tax charges.

Goldfajn stressed that when the loan is sure to be repaid, the spread is lower. As an example, he mentioned automatic paycheck deduction loans to public servants.

Translated by Fabrício Ferreira