(Image: Disclosure/ Banco Safra)
The market has been falling in recent weeks amid fears of inflation high, elevation of fees and mismatches in the public accounts. Since the year's highs, the Ibovespa has fallen by 5%. An unfreezing of R$1.7 billion in spending has helped to worsen the bad mood.
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But for Joaquim Levy, chief economist at Harvestthe scenario is not one of a 'catastrophe', despite the challenges. According to the former Finance Minister, Brazil is experiencing “an economy that is growing, employment is going well, inflation is low. OWe will have to face fiscal challenges with serenity and clarity.”
The speech took place in conversation with journalists at the Safra Conference, which brought together the country's main businesspeople.
“Look, we are here with five businessmen, of different sectors, and are extremely confident,” he said.
The event featured names such as Guilherme Johannpeter, from Gerdau (GGBR4), Rubens Menin, da MRV (MRVE3), Rubens Ometto, from Cosan (CSAN3), among others, in panels that journalists did not have access to.
Questioned by Money Times If the government is facing fiscal challenges, Levy responded that the economic team is 'doing what it can'.
“O Ministry of Finance has been very consistent, tin much dialogue with Congress, ensuring that things move forward. TheYesterday, Vice President Alckmin said that will comply with the framework, this is guaranteed. Alckmin understands this tax business“, these.
Part of the market and managers question the sustainability of coal. At an XP event, Luis Stuhlbergerfrom Verde, a harsh critic of the Planalto Palace, stated that the government has an expansionist policy of “turbocharging the economy on all possible cylinders”.
“O Fernando Haddad has been successful in pushing issues forward. But if you look at the spending trend, it is explosive and the market can sense that,” he said at the time.
In Levy’s view, “there are a series of indicators that compliance with the framework is increasingly credible”.
To justify the statement, he cites that the government exchanged uncertain revenues from Carf for more certain revenues, resulting from a long negotiation in Congress.
“Now we know how the payroll tax relief will be compensated. At least for now. Later on, we will see how it evolves.”
Copom Minutes
Regarding the Copom minutes, published on Tuesday, Levy described them as 'interesting'. “She was very cautious.”
“For example, we have the good news that the job market is strong, but this has not yet translated into price pressures,” he highlighted.
According to him, the Central Bank will continue diligently watching how the economy will respond before taking further steps.
“There are people who are already rushing, they are already saying that it will go up 3%, but that is not what the Central Bank is saying”, he says.
As in the statement, the Committee gave no indication of the pace and total magnitude of the monetary tightening cycle.
Selic rate hike
Last week, the monetary authority decided to raise the Selic by 0.25 percentage points (pp), to 10.75% per year.
Levy recalls that he had already signaled that he would increase interest rates.
“When this was given back then, about a month and a half ago, I said it was an interesting option, because it created a bridge,” he said.
This bridge, according to him, will be up until November.
“What will the world be like in November? The self Roberto Campos Hey, there's an election there. USA, what happens to the world economy, a China now it gave some tax incentives. So, like this, we have to go step by step, see what the scenario will be like”, he said.