OCDE: Fiscal adjustment to bring economic solidity to Brazil

A report by the Organization for Economic Co-operation and Development (OECD), released Wednesday (Nov. 4) during a ceremony at the Finance Ministry, suggests that Brazil's fiscal adjustment is likely to help the country restore its economic solidity and higher living standards. In OECD's view, the country's fiscal efforts "will be critical for strengthening public finances, restoring market confidence and preparing for intense population ageing."

The organization estimates that Brazil's inflation should reach 9.4% in 2015, but also predicts that the rate will experience a dramatic plunge in the following year if the government manages to its fiscal adjustment measures. The OCDE further recommends simplifying changes to the Brazilian tax system.

During the event, Finance Minister Joaquim Levy argued for the balance of public s, and noted that the country will be forced to create more taxes in case public spending sures economic growth. Also at the ceremony were Environment Minister Izabella Teixeira and OECD Secretary-General Angel Gurría.

Levy pledged to submit to Congress a proposal for a reform aimed at simplifying levies, and said that the government has sought to keep Social Security a reality in Brazil. “For instance, we spend a lot on sickness allowances. If the country manages to cut those costs down to the average in developed countries, the amount spared will total $2.6 billion to $4 billion,” he said.

According to OECD, Brazil is facing a critical moment to “put the economy back on track”, and fiscal as well as monetary policies will have to steady the public debt and reduce the inflation in order to “restore the good reputation of policies devised over the course of many years.”

In OECD's judgment, as Brazil's infrastructure fails to attend to the needs of the industry, the country has not properly prepared to tackle the “competitive pressures” and therefore shows “low integration in the international market,” thus failing to take advantage of global market trends.

Translated by Fabrício Ferreira

Relacionadas

Levy reaffirms strategy to make fiscal adjustment