Sale of ‘King’s Mint’ Touches Nationalistic Nerve in Brazil

Updated on
  • President Temer wants to sell 57 assets to raise $14 billion
  • Money printed in Brazil may be 20% costlier than abroad

Brazilians opposed to President Michel Temer’s vast privatization plans are zeroing in on his proposed sale of the national mint as proof he’s hawking the family jewels.

Founded by the King of Portugal to mint coins from the colony’s mining riches, the 323-year-old “Casa da Moeda” is seen by many as a symbol of the country’s sovereignty. Some say it’s also a matter of national security to have the state print its own money, even if at a higher price.

Casa da Moeda

Courtesy of the Casa da Moeda do Brasil

The mint is just one of 57 state assets Temer intends to auction amid a severe budget crisis, and it’s dwarfed by the proposed privatization of power giant Eletrobras. Also slated for sale are a national lottery, Sao Paulo’s airport and a slew of other infrastructure assets, which together could yield some 44 billion reais ($14 billion) in extraordinary revenue.

“They’re trying to sell the mint, but the currency is a country’s heritage,” former President Luiz Inacio Lula da Silva told supporters Saturday at a packed plaza in a northeastern capital. “What woman would marry a man who, instead of looking for a job, says he’ll sell the fridge, bed, oven and TV? That’s what they’re doing!”

Debate about downsizing the state is likely to intensify during next year’s presidential campaign, with Lula and his Workers’ Party taking aim at privatizations. Some of Temer’s allies also aren’t fully on board with the planned sales, as jobs at state-run companies are often doled out to coalition partners in exchange for congressional support.

Profitable, But Expensive

The planned sale of the mint by year-end is particularly unnerving to Temer’s critics because, unlike some other state enterprises, it has turned profits for at least the past 13 years. National security could be compromised by handing over the role of printing money, along with sensitive personal information for making passports, said Roni da Silva, vice-president of the mint’s union.

Most countries don’t share the same concern. The world’s largest private manufacturer of banknotes, UK-based De La Rue Plc, has been hired by more than 140 countries over the past three years to print their currencies, including British pounds. It also makes passports for 40 nations. 

The problem is that in Brazil local production of money comes at a higher cost. The mint employs doctors, dentists, a nutritionist and a massage therapist for its 2,700-strong staff working at a sprawling complex on the outskirts of Rio de Janeiro. Last year, for the first time since the 1994 launch of Brazil’s currency, the central bank was authorized to import reais -- and did so at a nearly 20 percent discount versus the price the national mint offered, according to the bank’s press office.

For more than a year Brazil’s mint has been cutting costs, including a reduction of its infirmary, water conservation, and savings in the purchase of paper and ink, it said in an emailed statement. Still, it’s the government that decides whether to privatize the company, its president Alexandre Borges Cabral said in a separate email.

Corruption may also be driving up costs. In June, federal police launched an operation to investigate fraud in a mint contract that allegedly generated some 70 million reais in bribes.

Others such as Andre Perfeito, chief economist at Gradual Investimentos, see no reason a private company shouldn’t take on the mint’s responsibilities. The problem, he says, is that the government seems to be rushing the sale of state assets without a strategic plan.

“What worries me about its privatization isn’t the privatization itself. It’s that it shows how desperate the government is for money.”

— With assistance by Simone Preissler Iglesias, and Luisa Marini

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE