RIO DE JANEIRO, BRAZIL – While the Ministry of Economy struggles to extinguish 248 public funds, in an effort to eliminate so-called “earmarked money” from the budget, the Central Bank is claiming a fund of its own.
In the Central Bank’s autonomy project, which is being discussed in the Chamber of Deputies, an article has been included that provides for the establishment of a fund to finance “investments and strategic projects” of the institution.
The funds will be generated from sums paid by the banks to the Central Bank, for the use of technological systems. In 2019 alone, the figures collected reached R$274.4 (US$64) million, but it has not yet been defined how much of this will effectively go into the fund.
The Complementary Bill No. 112, which addresses the autonomy of the Central Bank, was submitted last year by the government of Jair Bolsonaro to Congress and was incorporated into another proposal that had been sitting in the Chamber of Deputies since 1989, Bill No. 200, to ease the processing.
One of the main points in the bill establishes four-year fixed terms of office for the president of the Central Bank and the eight executive officers in the institution.
The rapporteur for the subject was Federal Deputy Celso Maldaner. In his report, Maldaner included an article establishing the National Financial System Development Fund, to be handled by the Central Bank. In the government’s proposal, submitted in 2019, there was no such fund.
The newspaper O Estado de S. Paulo and Broadcast (the Estado Group’s real-time news system) found that the incorporation of the article was requested by the Central Bank itself. The aim is to “earmark” the money for use in technology projects, one of the priorities of the current president of the Central Bank, Roberto Campos Neto.
The article provides that the Central Bank will manage the resources in accordance with regulations to be issued by the Central Bank itself, based on guidelines from the National Monetary Council (CMN). There is no clarity on how the resources will be used or how much the fund will have at its disposal. According to the Central Bank, the regulations to be issued by the CMN will determine the percentage of the amount paid each year by the banks into the fund.
The proposal further provides that the Central Bank will only report on the use of the money to the CMN – which is made up of the President of the Central Bank, the Minister of Economy and the Special Secretary of Finance of the Ministry of Economy.
The establishment of the fund runs counter to the Proposal for Amendment to the Constitution (PEC) No. 187, which began to be processed in 2019 in the Senate and is supported by the Ministry of Economy, and provides for the extinction of all 248 funds not provided for in the Constitution, which concentrate some R$220 billion in resources.
In a note on the proposed fund, the Central Bank argued that, “as per the rapporteur’s proposal, the referred fund will be used only to finance the Central Bank’s investments and strategic projects related to technical and technological development and the promotion of stability in the financial system”. The Central Bank also stressed that the application of the resources will be defined based on the CMN’s guidelines.
Source: Infomoney