Institute insists that Brazil also needs microeconomic reforms

For instance, IPEA researchers stated that it is necessary to increase

Published in 05/12/2016 - 16:23 By Kelly Oliveira reports from Agência Brasil - Brasília

Fiscal reforms and the reduction of interest rate are not enough for a substantial recovery of economic growth, according to a letter published by the Institute for Applied Economic Research (IPEA), released today (Dec. 5).

"In fact, to resume economic growth in a sustainable way, among other things, it is also necessary to advance the agenda for microeconomic reforms that boost the economy's productivity as a whole," the document reads.

In the researchers' view, it will be necessary to address other structural issues that have been weighing on the country's development: improve the business environment, laying special emphasis on the regulatory issue; the reform of the tax structure, which is complex and creates several distortions; changes on the labor legislation, considered too rigid; and increase the degree of exposure to the international trade.

"The country will not grow consistently again only through simple measures stimulus with short-term growth," read the letter.

Public debt

On the Proposed Constitutional Amendment 55, which limits the government's spending for the next 20 years, the letter report affirms that it has the potential to stabilize and reduce debt, ensuring, thus, the sustainability of public debt.

But, according to the note, in order to enforce the fiscal rule proposed in the constitutional amendment, additional reforms are essential. Among the overhauls proposed by IPEA, there are the Social Security and Social Assistance Law. If these reforms are not carried out, says the note, spending on income transfers would excessively compress other public spending, making it impossible to be in line with the new fiscal rule, which the researchers reaffirmed will be a challenging task.

Translated by Amarílis Anchieta

Fonte: Institute insists that Brazil also needs microeconomic reforms

Edition: Maria Claudia / Nira Foster

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