SAO PAULO, July 11 (Reuters) - Brazilian Finance Minister Henrique Meirelles has ruled out changes to a bill that sets a new benchmark interest rate for state development bank BNDES loans, after the lender's top executive sought to undermine the proposal, newspaper Valor Econômico said on Tuesday.
In an interview, Meirelles told Valor that he would discuss with lawmakers any aspect of the proposal to create the so-called TLP lending interest rate, but that he will not water down the plan - as BNDES Chief Executive Officer Paulo Rabello de Castro had recently suggested.
Last week, two senior BNDES vice presidents quit after Rabello called for adjusting the TLP based on the consumer price index and not the yield on inflation-indexed government debt, as the original plan defends. Meirelles told Rabello by phone on Monday that the plan will stay unchanged, Valor said.
Press representatives for the finance ministry and the BNDES did not have an immediate comment. Rabello told Valor that he is "perfectly aligned" with Meirelles on the plan.
Replacing the existing TJLP rate with the TLP rate should keep a lid on credit subsidies financed with taxpayer money, potentially cutting borrowing costs as a whole. Furthermore, the TLP could entice capital markets activity and facilitate the pricing and securitization of BNDES loans.
The decision to replace the TJLP benchmark was a key step by President Michel Temer's administration to reverse decades of subsidies that have cost taxpayers trillions of reais without a significant effect on long-term growth.
BNDES is the largest source of long-term corporate loans in Brazil. The TJLP rate runs below the benchmark overnight lending rate, partly because of an effort by politicians to boost growth and create jobs - costing taxpayers an average 1.5 percent of gross domestic product in recent years.
Planning Minister Dyogo Oliveira told Reuters on Monday that the government was not discussing potential changes to the planned TLP rate. (Reporting by Guillermo Parra-Bernal; Editing by Nick Zieminski)