BRASILIA – President Jair Bolsonaro submitted a bill to Congress on Thursday that would allow the Brazilian Central Bank to make monetary policy independently.
The move was announced during a ceremony at the Planalto presidential palace to review the administration’s accomplishments during its first 100 days in office.
The far-right leader had promised during his campaign last year to make the Central Bank independent.
The presidential chief of staff, Onyx Lorenzoni, said the legislation, which will be debated by lawmakers, will allow Brazil to “have a very important tool used by the world’s leading nations to provide confidence and stability in the economy.”
The goal is to have “a guardian of the currency and the economy that will protect the currency regardless of the administration in office,” Lorenzoni said.
The bill would retain the current system for appointing the Central Bank chairman, who is nominated by the president and subject to confirmation by Congress.
Under the legislation, Central Bank chiefs would continue to serve four-year terms, with a limit of one re-nomination.
The bill, however, would prohibit future administrations from sacking Central Bank chairmen over differences about monetary policy, such as their strategy for dealing with inflation and setting interest rates.
“With this (change), you will have institutional stability” regardless of who “holds the presidency,” whose occupants also serve four-year terms, with a maximum of two terms in office, Lorenzoni said during a press conference held after the ceremony.
The bill says that “the success of the economic stabilization process started in 1994 shows the benefits of monetary stability and its contribution to the growth of the economy and the reduction of interest rates.”
The legislation notes that having an independent Central Bank will contribute to economic growth and “lay the foundation for an increase in the efficiency of the economy, productivity and sustained growth, which is the goal of society as a whole.”
One of the biggest challenges faced by Bolsonaro’s administration is helping Brazil’s economy recover after a severe recession four years ago that caused the gross domestic product (GDP) to contract 7 percent between 2015-2016.
Since 2016, the economy has slowly recovered, but the 1 percent annual GDP growth registered by Brazil is considered insufficient by both the administration and the financial markets.