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By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Although more optimistic about Brazilian GDP growth, the International Monetary Fund (IMF) recommended on Thursday that the Brazilian government increase taxes to seek to balance its public accounts. According to a document released by the entity, the country should not only decrease expenditures but increase taxes and continue to conduct structural reforms so as to reduce earmarked spending, such as social security.

Brazil,International Monetary Fund director,  Christine Lagarde,
International Monetary Fund director, Christine Lagarde, photo by Stephen Jaffe/IMF.

“The new government should complement the proposed limit for current federal spending with tax measures and confront the rigidity of spending and unsustainable mandates, including the pension system,” said the IMF document.

The document will be delivered by IMF officials to G-20 Finance Ministers and representatives scheduled to meet in China starting on Saturday, July 23rd. Brazil will be represented by newly appointed Central Bank president, Ilan Goldfajn.

For the IMF, Brazil should conduct reforms which will increase the country’s productivity and competitiveness, such as the privatization of the country’s infrastructure sector.

On Tuesday, the IMF released a report which forecasts an improvement in Brazil’s economic scenario. The entity reduced its negative outlook forecast for the country’s GDP in 2016, from 3.8 percent in April to 3.3 percent in July. The international entity also forecast a mild growth in 2017 of 0.5 percent. According to the international agency, the recent increase in commodities prices has improved future growth conditions for countries such as Brazil.

In May, while announcing new economic measures, Brazilian Finance Minister, Henrique Meirelles emphasized that the country’s tax burden is already very high. “It is important not to overburden society with more taxes,” he said, noting that although the increase in taxes was not something being considered at the moment, it was not all together rejected in the future, if these measures did not produce the desired results.

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2 COMMENTS

  1. Without a change in workers rights, and the fact that the taxes we in Brazil pay seem to do nothing but enrich corrupt politicians, the IMF recommending new taxes is a sham. They should have recommended that more efforts should be made to fight corruption.

  2. As long as politicians at every level are corrupt and dishonest and only seek to further their own and their friends interests, Brazil will never move ahead. Compare Brazilian politician’s entitlements to other countries and you will see why Brazilians at all levels are drowning in taxes and other fees.

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