IMF Says Reforms Needed for Brazil’s Economic Recovery

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The proposed amendment of a limit on public spending and the Brazilian government’s effort to reform social Security are important factors for restart of economic growth in the country, says the latest Fiscal Monitor report released by the International Monetary Fund (IMF) on Wednesday.

According to the IMF although the country’s turbulent political scenario constitutes a source of uncertainty the Temer Administration has pressed ahead with the necessary reforms.

“They have recently this week, at the highest level, reaffirmed their determination to continue with the reforms, pressing ahead with pension reform, in particular,” said Oya Celasun, Chief of the World Economic Studies Division, earlier this week in a press conference at IMF Headquarters in Washington.

“If they are successful in implementing that, that should set the stage for returning fiscal finances to a much healthier setting and also putting a strong foundation for a return to stronger growth in Brazil,” concluded Celasun.

The report predicts that Brazil will emerge from a full two-year recession in 2017 and grow by 0.2 percent. By 2020 the country should start to register primary surpluses. The international entity also says that freezing expenditures in real terms will help to reduce the deficit although the ratio of gross debt to the GDP is likely to continue to grow until at least 2022.

Finance Minister Henrique Meirelles arrived in Washington DC on Wednesday to attend annual meetings at the IMF and the World Bank. According to Meirelles’ office the Finance Minister will meet with officials of these international organizations and discuss the reforms to be implemented in the country.