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00:00Thank you so much, Minister. It's a pleasure to have you with us. I would like to start
00:09by asking you about this moment that the world is living right now, on the eve of a tech
00:19revolution, artificial intelligence driving this revolution and offering at the same time
00:28big opportunities and big challenges, including economic and climate ones. Take into account
00:37that this is a technology spearheaded by China and United States. How can Brazil be part of
00:45this revolution? Well, I believe that in three years, Brazil did a lot in order to create
00:58a favorable business environment and the investors see that. If you get an infrastructure investment
01:07in Brazil and the work that is being done and all the Brazilian infrastructure, well, numbers
01:12do not lie. We've never had so many B3 bids for roadways and infrastructure in general,
01:23as we've had in recent years. The Ministry of Transport will five fold our average of previous
01:34years in terms of business offerings in Brazil. All of that with a very significant rate of
01:40participation, the bids are very competitive. If we check the tax reform and what it will
01:47mean to Brazil, even the most pessimist forecast estimates a 12% impact on our GDP. The optimist,
02:0020% tax exemption on investments. A cash back mechanism that transforms the tax on consumption in a
02:10progressive taxation because you're able to give back a certain percentage of the taxes to the low income
02:21population. We are about to vote a new stage on the income reform in Brazil. We've had several stages. We are
02:32changing the rules because we want to change the inequality in Brazil. We have the best Gini index of recent history. With inequality, there is no development. So we are changing credit, insurance. We have the AI framework, read data. I can spend the whole day telling you about it.
03:09Okay. Now thinking long term and there's new tech landscape around the world. I know that USA have defended this agenda to bring more data centers into the country. What does Brazil have to offer? What's our standpoints?
03:28Well, Brazil is in a much better situation than our internal analysts claim. And the indexes, they show that finance economy is about the indicators, right? And we are not paying attention to the indicators. We will have the lowest inflation in the frame of four years of the whole Brazilian history.
03:57An all-time low unemployment. An all-time high level of employment since 2010. And if you ask me about it, we are going to have the best fiscal results in four years since 2015.
04:18When the fiscal crisis started in Brazil.
04:19When the fiscal crisis started in Brazil. I have been reading the newspapers and the critics. I don't know if they are paid to say that. I don't know why they say such things, but we are going to deliver the best fiscal result in four years.
04:38And even take it into account all of the default from previous years. And people talk about a fiscal crisis. So this is a collective delirium. I'm trying to understand it from the psychological point of view, because from the economic point of view, there's no way to understand it.
04:55People are saying that people are saying that I'm going to change the primary results goals since 2023. And I have not done that once. They are saying that I'm not going to fulfill the goals. And I do that consistently.
05:10Every year. I believe that Brazil is in a best position than any other last term country with whom would you switch places. Venezuela, Ecuador, Peru, Argentina. We have tailwinds in Brazil.
05:28And why finance is no longer in our opposition's agenda. They don't talk about it anymore. It's not on the headlines. We have the investors talking about it. I'm concerned about the amount of money that we have inflowing.
05:48Minister, many investors are concerned about an eventual second term of President Lula. And that in this second office, then the fiscal framework will not be sustainable. Expenses would be greater.
06:10And is he concerned about a more robust investment legacy? Well, the investors are not worried about that. They're worried about his fourth term. Lula is about to have his fourth term as the president of Brazil.
06:23And in every one he has delivered a better result than the previous one. In all aspects, all aspects part of it. And it will be no different. President Lula is social aware.
06:43He suffers when he realizes what is yet to be done in Brazil.
06:47He cannot accept our housing deficit. When he sees people starving, his despair if deforestation rates do not improve. He argues with everybody. He wreaks havoc.
07:04So, we need to manage the president's anguish and his revolt, which is very, very appropriate, and to guide us through the right path.
07:22More than 5% of our GDP is tax exemption to favor a handful of companies with this fiscal waiver.
07:31And every year, I tell the Congress, we need to cut these benefits. We need to put a cap on expenditures. We have a lot of dire needs.
07:47What has happened? We have the O-13 being approved, but then it was excluded from the agenda. But now it's being approved as a bill.
08:03So, we are not going to give up. Everything that we've been trying to do since 2015.
08:17I remember at the beginning of the year, this analyst was saying that the dollar would reach 7 reais, 7.30, and it's now 5.40.
08:27And it's only 5 months since the previous catastrophic forecasts and projections on the fiscal matters and the dollar exchange rates.
08:41People said that we could only put rings on inflation by 2027.
08:46And we have interest rate at 15%.
08:52And they have to go down.
08:58However much pressure you may have on the central bank, the interest rates have to go down.
09:04You can't have 10% real interest rate with inflation rate at 4%.
09:10How can you have inflation at 15%?
09:12What would justify it?
09:13Well, I don't manage the central bank.
09:18If I were, I would be voting for the decrease of the interest rate.
09:2310% real interest rate does not make any sense.
09:28I'm allergic to inflation.
09:30I know what inflation will lead to.
09:32I know what it causes in people's lives.
09:37But you have to think about what makes sense.
09:39It's a question of razoabilidade.
09:43You know, the difference between a medicine and poison is just the dose.
09:49We can start 2026 in a comfortable position.
09:56We can get to the end of this term with all of the metrics and indicators at a much better level.
10:02We can control the debt paying low or less interest.
10:10That has an impact on inflation as well because it will impact the company's manufacturing capacity.
10:15What do we need to do for the inflation expectations to be back to lower levels?
10:23They are going back to lower levels.
10:25They are not going back to lower levels because people are stubborn.
10:29Because expectations are very much about what people want to happen as well.
10:34I see a lot of people sort of rooting against the country in the financial market.
10:42That person has their own ideology, so they are betting on the increase of the dollar.
10:48We have to really to study this.
11:00We have to really understand what is going on, understand what we have lost.
11:06And, well, you asked about, I'm asked about this every time, and I always answer the same thing.
11:12We are determined to do what wasn't done until now.
11:22We want to respect the primary levels and keep or abide by the goals or targets that have been set,
11:31and we will pursue the results, whatever happens.
11:34My team is really determined to find the results, to get to these results.
11:42Everything you've seen, we continue to deliver.
11:57The, well, one thing that would be wrong for me to say is to say that everything is solved.
12:08I have been given interviews for three years, and I'm not going to say that.
12:11I will never say that because it's very hard for one day for the Minister of Finance to say that every problem has been addressed and solved.
12:20And I know the Brazilian household.
12:23I've known it since 2003.
12:26My first position was in the Ministry of Planning in 2003 after the PITA term in Sao Paulo.
12:36I thought I would never see something as poor as that until I got to 2023 in the Ministry of Finance.
12:42I thought I wouldn't have to deal with such a complicated situation.
12:45But the same way I got to see the term after PITA's term,
12:56Sao Paulo was very much in debt when I took office,
13:01and they got substantial levels of investment.
13:04And I know what I did to get that.
13:07And I know what the problems are.
13:11I know what the mandatory expenses are.
13:14You don't need to be an economist to know what the problems are.
13:17But you need to create the political environment for it.
13:21You need to relieve tension in the Congress.
13:25The Congress has to understand, as they have been understanding.
13:28Well, it's 513 Congress people.
13:32It's easier to convince 10 people than 513 people because they have so much to think about.
13:39But we're taking large steps forward.
13:42We're striding forward.
13:43Next week, the Supreme Court is going to rule about a matter
13:53concerning the financial responsibility going on to the legislative branch.
14:02The Congress won't be able to create expenses without creating new sources of revenue.
14:07That is going to be a revolution.
14:17I am sure that this value has been understood.
14:24With all the challenges that you have seen,
14:27I mean, people want to deliver fast,
14:30and I understand that people expect speed,
14:34but you need to work at the speed that the economy will allow you to.
14:40Otherwise, it's just going to backfire.
14:42And we're continuing to manage relationships
14:47and whatever we need to manage,
14:50and we're on the right path.
14:52No law is going to be revoked
14:55because these laws are on the right track.
15:01This is a Bloomberg Green event, right?
15:08So let's try and go back to the energy transition discussion.
15:15The world has changed
15:17ever since you took office as the Minister of Finance.
15:22Countries are spending more money on warfare.
15:26Bill Gates said the other day,
15:30that the world is not going to end
15:39because of financial
15:41or end because of climate issues.
15:48How difficult is it to have the transition
15:52or the energy transition
15:54looking at the whole world scenario?
15:57The competitive edges that we have in Brazil
16:04go hand-in-hand with the climate agenda.
16:09Brazil has clean, cheap energy.
16:12It would make no sense for us to replace them
16:15with dirty, expensive energy.
16:18So what Bill Gates thinks doesn't really make sense.
16:20We need to perfect the regulatory framework
16:24for the electricity segment.
16:27And there's a lot of lobbying.
16:28The electricity segment has a whole lot of lobbying.
16:32There is the coal folks
16:35and the petroleum, the oil folks.
16:40But we're making a headway.
16:44Biofuels, for example.
16:48Brazil has 30 to 40 years
16:50of tradition in biofuel.
16:53We've only gotten better.
16:56Why would we let go of this agenda
16:58because of the climate issue
17:00or the climate agenda?
17:01That's a bit of a controversial statement
17:09that the climate isn't a problem, right?
17:12I have an academic history.
17:15I'm a scholar.
17:16So I always look at what scientists are saying.
17:21But again, there's no reason for Brazil
17:23to let go of an agenda
17:26that can be so beneficial to the country.
17:29I've been speaking about
17:34Redata, BFSS, TFFF.
17:41And they have a connection to the green agenda.
17:43And that really excites investors
17:47that want to invest in Brazil.
17:48So I don't see any reason
17:49why Brazil would move away
17:50from the sustainability agenda.
17:56When it comes to the TFFF,
17:58do you expect the countries
17:59to make investments?
18:02From what I've heard
18:03from my counterparts,
18:05I think we'd be able
18:08to have about $10 billion
18:09by the end of next year.
18:11Brazil will start
18:13chairing COP next week.
18:16And there are several work friends.
18:22There's the taxonomy coalition
18:25when it comes to the international carbon credit market.
18:29But what is most accessible
18:31with support of the World Bank
18:33is the Bank of the Forest.
18:36Ita MaratÃ,
18:39the Brazilian diplomacy,
18:43the Ministry of Finance.
18:45We have to make that fun happen.
18:52If we do,
18:54we're going to start having
18:55practical results.
18:58We're not going to be
18:59preserving the forest
19:00because someone...
19:01I mean,
19:02would we stop
19:03preserving forests
19:04because someone thinks
19:05that the financial
19:05or the climate program
19:07is at an end?
19:08No,
19:08that wouldn't make any sense.
19:12It's very important
19:12to preserve the forest.
19:14And then you have a chance
19:15to secure
19:16sustainability
19:19for the country
19:20at a very low cost
19:21in comparison
19:22to the benefits
19:22that you're going to have.
19:23I think we've come to an end
19:26of our 20 minutes,
19:27Minister.
19:28Thank you very much
19:29for your time.
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