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Brazil must fight tax distortion to grow, says OCDE

The Central Bank President, Alexandre Tombini, said during the event that the country wants to "convince the G20 that it is on the track to increase confidence and return to growth from 2016"

Reduce the informality in the market, advance in investment in education and infrastructure, besides fighting the "tax distortions" and reduce trade barriers. That is the recipe of the OCDE (Organização para a Cooperação e Desenvolvimento Econômico - Organization for Economic Cooperation and Development), a kind of club of the world's richest countries for the resumption of growth of the Brazilian economy.

In a report , published at the meeting of the G20 economic leaders in Istanbul (Turkey), the agency presented a series of measures which, in its view, should be taken by the Brazilian authorities.

"The more skilled workforce, the improving in infrastructure, and fewer tax distortions result in productivity improvements," according to the text excerpt of the document, presented by the General Secretary of the OCDE, the Mexican Angel Gurría.

The study emphasizes, for example, that "no measure was taken" to mellow the issue of taxes. The country, he stresses, must "reduce fragmentation and complexity of the system."

The report points out, among other things, unfinished works PAC (Programa de Aceleração do Crescimento - Growth Acceleration Program), suggesting that the country "will improve the ability to execute projects without unnecessary delays." In this passage, the OCDE highlights the need of modernize the port sector and the electricity distribution network.

The document also states that to accelerate the productivity, the country needs to invest in improving its educational system. "Through a better remuneration of the most effective teachers and performance incentives," he says. The OCDE recommends full school day and building more schools.

Gurría gave a press conference with the Turkish Deputy Prime Minister, Ali Babacan. The leader of Turkey said he did not know yet if the G20 economic leaders meeting in Turkey would "compromise" with the creation of goals for the increase of investments.

Also present at the meeting in Istanbul, the president of the Brazilian Central Bank, Alexandre Tombini said that the country wants to "convince the G20 that he is on the way to increase confidence and to return to growth from 2016.

"I have the ambition to convince them that we have the right agenda for improving confidence in Brazil in the coming years and that the policies that we are implementing will creates a better economic outlook in the medium term, starting in 2016," he said when answering about the intentions of Brazil at the summit.

The boss of the Brazilian Central Bank pointed out that there is no expectation of growth in the country for 2015. "As the minister Joaquim Levy, (the growth) tends to be" flat "(stable)," Tombini said. In a closed meeting in Davos, in January, Levy used that expression to say that Brazilian’s GDP (Gross Domestic Product) should not grow this year.

The Central Bank President also explained that the measures that the government has recently taken, such as increasing the gasoline tax, which increase inflation in a short term.

He pointed out, however, the market’s expectation of inflation reducing from 2016 until 2019. In Davos, the Central Bank President had already mentioned this estimate, reiterating that the country can reach the center of the goal in the middle of next year.

Tombini highlighted the government's infrastructure development measures under way and implemented other reforms that, as he said, seek the resumption of confidence in the economic growth. "We have to continue in that direction," he said.

Source: Folhapress
Version: Grazielle Segeti



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