Marcela Ayres & Bernardo Caram

BRASILIA, Reuters – The tightening of the US monetary system makes it more urgent to accelerate privatization efforts at Brazil’s biggest utility Eletrobras. This is according to a top-ranking Economy Ministry official.

Diogo Mac Cord is the special secretary to the ministry for privatization. He told Reuters the Federal Reserve’s stance to tame inflation will decrease global liquidity and force Brazil, which offers higher returns, to draw investors.

Brazil’s Federal Audit Court (TCU), is set to approve the largest privatization plan by President Jair Bolsonaro on Wednesday afternoon.

Mac Cord stated that Eletrobras shares could be less popular in the Northern Hemisphere during summertime. However, he stressed that Brazil’s primary concern is the Fed’s rate decision.

The most alarming thing about the rising American interest rate curve is its steepening. Each half-point they raise drains money and squeezes liquidity. In an interview, he stated that this is why the race against the clock exists.

At its June 15th and July 27 meeting, the Fed will likely raise its policy rates by 50 basis points.

Although privatization of Eletrobras had been planned for May of this year, it was halted by questions from the TCU auditor court about the transaction value.

Mac Cord was present at meetings with Paulo Guedes (Economy Minister) and Adolfo Sachsida (New Energy Minister), Tuesday to discuss the agreement, which includes floating shares to reduce government’s largest stake down to 45%.

Rodrigo Limp, Eletrobras’ Chief Executive Officer, stated that the company may be privatized as soon as June.

Mac Cord is convinced Brazil should also privatize its state-run Petrobras, while the commodity remains relevant globally. He said that his office had not received formal instruction to investigate such an operation.