Brazil government pushes central bank to handle rural insurance, say sources

4:04 pm Tuesday, July 16th, 2024

By Marcela Ayres

BRASILIA (Reuters) – Brazil’s government has suggested that the central bank should cover the costs of a rural insurance program, two sources said on Tuesday, which may delay a committee vote on a constitutional amendment excluding the bank from the federal budget.

The maneuver could result in savings for the Treasury of 12 billion reais ($2.21 billion), according to the central bank’s estimate for the cost of the so-called Proagro program this year, made during a public hearing in Congress last month.

Currently, the central bank runs the program, but funding comes from the federal government.

The sources, who requested anonymity to discuss the idea, said no decision has been reached on the matter. Debate on the proposal could push back a Senate committee vote that some have expected as early as Wednesday, the sources added.

President Luiz Inacio Lula da Silva’s government has openly opposed the amendment granting financial autonomy to the central bank, whose governor Roberto Campos Neto supports the proposal.

In 2021, Congress granted the central bank operational autonomy, separating the governor’s term from that of the country’s president. Financial autonomy would give the bank more independence from the executive branch, as it would have full control of its budget for salaries and investments.

One source said that the proposal involving Proagro is part of the government’s strategy to drag out debate on the Senate’s Constitution and Justice Committee (CCJ) by introducing a contentious new issue.

“Senator Davi (Alcolumbre, CCJ chairman) will not oppose the government,” the source said.

A third source said Alcolumbre told senators on Tuesday that there will be no vote without a broad consensus on the topic.

The central bank and the Finance Ministry declined to comment. Alcolumbre did not immediately respond to questions.

($1 = 5.4228 reais)

(Reporting by Marcela Ayres; Editing by Brad Haynes)