Theme is part of the Financial Reform Agenda; idea is to cover banking, insurance, pension sectors
Marcos Pinto — Foto: Edu Andrade/Ascom/MF
The government launches this Thursday, in Rio de Janeiro, the Financial Reform Agenda for the 2023-2024 cycle, an expanded version of what was known as “IMK,” which aims to discuss with the private sector proposals for tax adjustments and regulatory improvements to stimulate the advancement not only of the capital market but also of the banking and insurance and pension sectors. The event will be attended by the Finance Minister Fernando Haddad, and Marcos Pinto, secretary for Economic Reforms. The first meeting of the group will also be held on the occasion.
In an interview with Valor, Mr. Pinto said that, in this first moment, 18 themes were chosen from 120 proposals received from 40 invited associations. “We gave priority to proposals according to our agenda,” he said. Among the main topics is the development of mechanisms to leverage payroll-deduction loans for private sector workers and expand the private debt market.
The list also includes the debate around the adoption of mark-to-market (daily updated value) in all pension assets and solutions to reduce the costs of hedge taxation abroad.
The idea is that the 18 themes will be distributed in working groups so that during August and December the proposals are produced. The suggestions that are of consensus between the government and the market will be transformed into bills and provisional measures, for example, and will be forwarded to the National Congress at the beginning of next year.
In the axis that deals with the banking sector, Mr. Pinto explained that the government wants to remove obstacles to the advance of payroll-deduction loans for the private sector, a factor that he considers “super relevant and important” to lower interest rates and increase the supply of loans. He recalled that the payroll-deduction loan for pensioners of the National Social Security Institute (INSS) works because it is linked to retirement and for public servants, due to job stability.
“We have the challenge with IT to implement payroll-deduction loans in the private sector and I think we can do this using eSocial,” he said, mentioning the Digital Tax Bookkeeping System of Tax, Social Security and Labor Obligations. According to Mr. Pinto, the government wants to study and discuss with the private sector mechanisms so that there is an automatic transfer of the payroll deduction from one company to another when the worker changes jobs. This could be done using government tools such as eSocial.
On the capital market axis, one of the themes of the Financial Reform Agenda will be the development of the private debt market. In Mr. Pinto’s assessment, it is necessary to remove ties in this segment to reduce costs, so it is necessary to clarify the rules on interest and review all the regulations on credit outside the banking market. According to Mr. Pinto, the debt market in the United States is five times larger than the bank credit market and Brazil needs to evolve in this direction.
Mr. Pinto further said that the adoption of mark-to-market will be discussed in the axis of insurance and pension. According to him, all pension assets, except government bonds, are marked to market. Therefore, in Mr. Pinto’s opinion, a general review of the rules is necessary so that they are isonomic between public and private securities. The rules for pension fund investments, such as allocation limits, could also be reviewed.
In the taxation axis, the idea is to deal with the distortions existing in hedge abroad. The subject is being discussed with the Secretariat of Federal Revenue so that the effect of taxation on these operations is neutral.
As in the IMK, the topics of the Financial Reform Agenda will be discussed during the second semester between representatives of the economic team, regulatory bodies, and market entities to reach consensual solutions that will be forwarded by the government to seek to remove obstacles to financial sector’s growth.
“We are calling it Financial Reform Agenda this year because we have made a lot of progress on capital markets issues in recent years and we wanted to use this mechanism of discussion with the market to cover other sectors of the financial sector, not just capital markets. So, this year, we are using four thematic axes all related to the financial sector, but not only to capital markets. That is why we changed the name and called the initiative this year the Financial Reform Agenda,” said Mr. Pinto.
*Por Edna Simão — Brasília
Source: Valor International