Brazil Has a Lot to Improve in Infrastructure and Taxes, Warns the IMF

Latinamerican countries could be better prepared to face the risk of recession if they followed the example of Chile and saved some of their budget surpluses by converting them into stabilization funds, suggested the IMF during its annual joint assembly with the World Bank in Singapore.

Financial markets vision of Latinamerica’s risks for the first time in a decade do not differ much from that of Asia as Argentina, Brazil, Colombia, Mexico and Peru consolidate their international reserves as a protection in the event of external crisis. But regional economies could go a step further insists the IMF.

"Even when Latinamerica has successfully used improved fiscal situations to project them into primary surpluses, outlays are again increasing in some countries and very few have been able to follow Chile’s example".

Chile’s budget surplus is expected to reach 6% of GDP this year, based on a scheme which deposits most of the copper exports surplus in a stabilization fund, according to IMF, which points out that many Latinamerican countries have been enjoying strong growth and extraordinary fiscal revenue mainly because of commodities’ high prices.

But the lack of savings and investment in infrastructure, plus debt/GDP ratios still above 50% in countries such as Argentina, Brazil and Bolivia, means that many of them remain vulnerable to big oscillations in export prices plus outside turbulences.

Brazil, Chile, Ecuador and Mexico need urgently to improve their maritime ports to OCDE (Organization for Cooperation and Economic Development) standards so as to reduce transport costs, is one of the IMF recommendations.

To be able to earmark more funds for social and education projects, regional governments will have to reduce fiscal exemptions and subsidies which traditionally have benefited the rich, points out IMF.

To achieve these goals IMF also recommends floating exchange rates and inflation targeting as the most solid anchors to contain misbalances and keep to original goals.

Another area to improve suggested by IMF is the banking sector by cutting taxes on financial transfers and lowering reserves requirements, particularly in Brazil and Paraguay, plus privatizing government managed banks which would certainly help to reduce banking commissions.

Mercopress

Tags:

You May Also Like

Brazil’s Top Gang Spreads Good Will Giving Away House and Bicycles for Kids

To raise cash and keep high the moral of its vast number of associates, ...

Despite Worldwide Retraction Brazil’s Sadia to Increase Sales to Arabs by 10%

Sadia, one of the greatest foodstuff exporters in Brazil and national reference in the ...

122 Million Brazilians to Vote in Mandatory Referendum on Guns

Everything is set in Brazil for Sunday’s (October 23) referendum on sales of firearms ...

Brazil Lends Petrobras US$ 13 Billion to Fund Its 5-Year, US$ 174-Billion Plan

BNDES, Brazil's National Bank for Economic and Social development, will lend 25 billion reais ...

Brazil’s Lula Won’t Say Until March Whether He’ll Run for Reelection

During a press conference today to various radio stations in Brazil, Brazilian President Luiz ...

Beef and Chicken Drive the Surge of Brazilian Exports to Iraq

Other countries in the Middle East have been showing potential to establish themselves as ...

Without Petrobras There Won’t Be Any Southern Gas Pipeline, Says Brazil

The Brazilian Minister of Foreign Relations, Celso Amorim, affirmed this Friday, May 12, in ...

South Americans Shouldn’t Be Distracted by US Military, Says Lula in Bolivia

For the president of Brazil, Luiz Inácio Lula da Silva differences inside the Union ...

Cuban Player Defects During Pan-American Games and Disappear in Brazil

Rafael D'Acosta Capote, 19, a handball player with the Cuban team participating in the ...

Arabs and Brazilians Should Have One Voice, Says Brazil

The Brazilian minister of Foreign Relations, Celso Amorim, stated yesterday, March 22, during an ...