RIO DE JANEIRO, BRAZIL – Brazil’s Supreme Court (STF) on Thursday 26) ratified a law enacted during the government of Jair Bolsonaro that gave autonomy to the Central Bank, which had been denounced as unconstitutional by two opposition political parties.
The lawsuit, filed by the left-wing Workers (PT) and Socialism and Liberty (PSOL) parties, alleged a procedural defect, but the argument was rejected by an 8 – 2 vote at the full court, after a hearing that demanded two days of debates.
The law was approved by Parliament and sanctioned by Bolsonaro last February. It enshrined the autonomy of the Central Bank, although it keeps it within the structure of the Executive Branch and submits it to its supervisory bodies.
The bill does not alter the Government’s power to appoint the president of the Central Bank, who must also be submitted to Congress for approval.
According to the new law, the president of the Central Bank will have a four-year term, which will begin in the third year of the term of office of the head of State, with the possibility of one reelection for the same term.
“A power is relinquished but for a democratic effort,” said Bolsonaro upon sanctioning the law, which in his opinion will generate confidence among domestic and foreign investors.
The autonomy of the Central Bank, which was debated in Brazil for the last two decades, was finally pushed through by the Minister of Economy, Paulo Guedes, a liberal adherent to the doctrines of the Chicago School.
In the opinion of the current president of the Central Bank, Roberto Campos Neto, the law granting autonomy to the issuer places Brazil among the “most modern” countries, which “have lower inflation”, which “is the most perverse of taxes”, and are “more predictable” for investors.