IMF backs 'ambitious’ green agenda on Brazil’s fiscal reform, Reuters

© Reuters. FILE PHOTO: The logo of the International Monetary Fund (IMF) is seen outside its headquarters building in Washington, U.S., on September 4, 2018. REUTERS/Yuri Gripas

By Brendan O’Boyle and Carolina Pulis

(Reuters) – The International Monetary Fund on Tuesday said it „strongly supports” Brazil’s efforts to improve the country’s fiscal position, while praising the country’s „ambitious agenda” for a sustainable, inclusive and green economy.

„Improving Brazil’s fiscal structure, broadening the tax base and tackling spending rigidities will support sustainability and credibility,” Ana Corbacho, head of the annual mission to the country, said in a statement after the fund’s visit.

Brazil’s finance ministry released new fiscal rules in late March to balance limits on spending growth under the administration of President Luiz Inacio Lula da Silva, who has pledged to boost social projects and public investment.

The new rules limit spending growth to 70% of Brazil’s revenue growth over the previous 12 months.

The government’s proposed fiscal framework targets a zero primary deficit by 2024, followed by a primary surplus of 0.5% of GDP by 2025 and 1% of GDP by 2026.

The IMF „staff recommends an ambitious fiscal effort that will continue beyond 2026 on a path to decisive debt reduction, while protecting social and investment spending,” Corbacho added in the statement.

Brazilian lawmaker Claudio Cajato presented a revised version of the government’s bill on Monday.

Corpacho also noted Brazil’s efforts to „lead a sustainable, inclusive and green economy” by, for example, cracking down on illegal deforestation and „improving competitiveness in renewable energies”.

In its first months, the Lula administration renewed an international funding campaign to fight deforestation and sought financing for green industries and renewable energy with China.

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