Mercadante at BNDES: appointment does not please the market, which sees the former minister as a representative of interventionists

President-elect Luiz Inácio Lula da Silva (PT, progressive-globalist) said this Tuesday afternoon (Dec. 13) that former Chief of Staff Aloizio Mercadante will be president of the BNDES in his government.

The confirmation took place in the closing speech of the work of the transition cabinet. He will replace current president Gustavo Montezano.

“Aloizio Mercadante, I saw some criticisms about rumors that you will be president of the BNDES. I want to tell you that it is no longer a rumor: Mercadante will be president of the BNDES”, said Lula da Silva.

Minutes after the confirmation of the name, the Ibovespa (IBOV), which operated close to stability, began to fall, and soon the fall surpassed the 1% level.

The index closed the trading session down 1.71%, at 103,539 points, while the dollar advanced 0.22%, at R$5.30.

MODEL WITH GUEDES AND MONTEZANO

In the government of Jair Bolsonaro (PL, right), with Paulo Guedes as Minister of Economy, the BNDES reduced its activities in the capital market, favoring the development of operations financed by private institutions.

And he dedicated himself to projects in strategic areas, such as innovation, sanitation, and asset concessions to stimulate regional development.

The development bank was also notable for the sale of stakes in publicly traded companies, such as Vale, a way to reduce State interference in the economy and in the private sector.

All this is now in check and will probably be suspended, given that the PT government will probably use the BNDES as one of the main actors for its policy of steering the economy by the state.

JOB CREATION

The president-elect generically addressed the issue this Tuesday when justifying the choice: “We need someone who thinks about development, who thinks about ‘reindustrializing’ this country, someone who thinks about technological innovation, someone who thinks about generating financing for the small, large and medium business, so that this country can generate jobs again”.

The information that Mercadante would be president of the BNDES has been circulating at least since last week in Brasília, but it had not yet been confirmed by the PT or by Lula da Silva.

The former minister was one of the coordinators of the transition work groups and the government program during the campaign, but he had not received a promise to be part of the government.

His nomination to work on the transition was even treated as a concession to Mercadante’s political group within the PT – the future president of BNDES is president of the Perseu Abramo Foundation, the academic arm of the PT.

During the campaign, Mercadante was one of the great defenders of the use of public banks as investment inducers to leverage economic growth through public spending. When he talked about it, he always mentioned BNDES, Caixa and Banco do Brasil (BBAS3).

His appointment to the development bank does not please the market, which sees the former minister as a representative of the interventionist theses in the economy, defended by the government of Dilma Rousseff (PT).

Mercadante was Minister of the Civil House, Education and Science and Technology in the Dilma government. He is an economist by training and is the founder of the PT. He was also a senator and federal deputy for São Paulo.

With the confirmation of the former minister’s name for the BNDES, the market should observe the impacts of the changes imposed by Mercadante’s management.

“The BNDES is an important player to be closely monitored, as a potential aggressiveness could create distortions in the dynamics of credit and in the evolution of the capital market”, pointed out analysts Gustavo Schroden (Bradesco BBI) and José Cataldo (Ágora Investimentos) in note sent to customers.

NO PRIVATIZATIONS

During this Tuesday’s speech, President Lula da Silva said that there will be no privatization of state-owned companies during his next government, as widely expected by the market, given that the issue had been openly addressed in the campaign. “There will be an end to privatizations in this country. They have already privatized almost everything,” he said.

“We want to say to the whole world: whoever wants to come here, come. There’s work, there’s things to do, there’s a new project to invest in, but don’t come here to buy our public companies, because they’re not for sale,” he said.

With information from Bloomberg Línea

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