Campos Neto hits back at Haddad and criticizes “political narrative” about high interest rates

Former Central Bank President Roberto Campos Neto responded to criticism from Finance Minister Fernando Haddad that he left a “legacy” of high interest rates for his successor at the helm of the monetary authority, Gabriel Galípolo. The executive left the institution at the end of last year.

Campos Neto led the Central Bank in the first two years of this third term of President Luiz Inácio Lula da Silva (PT) under strong criticism that he had raised interest rates for political reasons, as he had been appointed by former PresidentJair Bolsonaro (PL).

“History has shown that this is an unfounded political narrative. I think it is sad that the construction of a narrative is prioritized instead of seeking a structural solution to the problem,” said Campos Neto in an interview with Folha de S.Paulo published this Sunday (6).

Campos Neto was serving a mandatory quarantine of silence after leaving his position at the Central Bank. He took over as vice chairman and global head of public policy at Nubank earlier this month.

Without directly mentioning the minister, Campos Neto reiterated that his stance has always been “not to criticize people but rather ideas” and recalled that, in the last months of his administration, he sought to give more prominence to the then director and now president of the agency, Gabriel Galípolo – who “corroborated this” publicly.

“A political element has been inserted into the fiscal debate, which I think is very strong today,” he pointed out.

In Campos Neto's assessment, any decision about the direction of public accounts today is linked to a polarization that opposes rich and poor, which, according to him, compromises rational debate and prevents structural advances.

“The ‘us versus them’ discourse is bad for everyone. It is not what will make the country grow structurally. We need to unite everyone, the business owner, the employee, the government,” he said.

Campos Neto also warned about the growing risk of Brazil's public debt, classifying it as one of the largest among emerging countries. He defended an ambitious and credible plan to contain the increase in debt – a clearer signal to the financial market about the government's plans.

“We are at a time when, even when we collect much more, we are unable to generate surpluses. Without the conditions to lower interest rates much, we are heading towards a nominal deficit that remains stuck in a range of around 8%. Since we are unable to generate a positive primary balance, our debt will grow by around 3 to 5 percentage points per year,” he explained.

Campos Neto acknowledged that the government has adopted measures in an attempt to correct imbalances, but criticized the emphasis on increasing the tax burden. For him, this path has reached its limit.

Still, the executive supported some proposals under discussion, such as the reduction of exemptions, the taxation of dividends and the compensation with the reduction of the tax for companies. “I agree with eliminating exemptions on fixed income securities, as long as the rest is reduced, to equalize”, he said.

On the other hand, Campos Neto pointed out that the government needs to make a “positive fiscal shock” in order to lower the basic interest rate, currently at 15%. This needs to happen sooner rather than later.

He also denied that he would participate in electoral campaigns, as was suggested after leaving office that he could get involved in the candidacy of São Paulo governor Tarcísio de Freitas (Republicanos-SP) for president. However, he made an ideological provocation when commenting on the Latin American scenario.

“Left-wing ideologies are obsessed with equality and not with reducing poverty. Since equality is not a natural phenomenon, the government sells itself as necessary to correct this error,” he added, suggesting a conservative shift in the region.