São Paulo, 9/16/2003 (Agência Brasil - ABr) - Presidential Chief of Staff (ministro-chefe da Casa Civil), José Dirceu, says banks should reduce interest rates by the same amount that the government has reduced the country's key interest rate [known as the Selic]. Dirceu said that one of Brazil's problems is that it has a financial system that does not finance investments, but lives off transaction gains.

Dirceu declared that the country has given the banking system everything it wanted. Allowing it to be internationalized, computerized and free to set its own fees. Now, he said, it is time for the banks to finance Brazil.

The president's Chief of Staff added that it is not possible to live with credit card interest rates running at 7.5% to 10% per month, consumer interest rates at 7.5% a month, working capital interest rates at 40% to 60%, and the expected inflation for the year at 4% to 6%.

With regard to participation of the PMDB in the government, Dirceu declared that president Luiz Inacio Lula da Silva himself promised the party a place in the first ranks of the government. Probably the best thing to do, said Dirceu, would be to give the PMDB a ministry now run by the PT. (AB)