The International Monetary Fund (IMF) has issued a press release following the consultation with Brazil under Article IV of the IMF’s articles of agreement. The report notes that economic growth has decreased in recent years with sluggish investment, worsening competitiveness, a less favorable business environment and lower commodity prices.
From January 2015 the government has begun to introduce a number of significant measures to strengthen macroeconomic policy and restore trust in the economy. This involves an ambitious fiscal adjustment to increase the primary surplus of the nonfinancial public sector and stabilize or reduce nonfinancial public sector gross debt.
The report notes that there are difficult challenges from slowing growth, high inflation and deteriorating government finances, and there are also external downside risks. There is a need to improve policy credibility and restore market confidence, thereby boosting investment and competitiveness and providing a basis for strong, sustainable economic growth.
The IMF has welcomed the government’s new fiscal strategy which includes targets for 2015 to 2017 and aims to reduce gross debt ratios. Support is expressed for the focus on reducing current expenditures and removing tax exemptions to make room for spending on investment and social programs. The IMF considers that priority should be given to infrastructure investment and to initiatives to improve tax efficiency, improve the business climate and boost international trade.
