WASHINGTON, March 26: The International Monetary Fund on Friday praised Brazil for an “impressive” economic transformation, while calling for additional measures to boost growth and curb poverty. In an annual report on the Brazilian economy, IMF directors welcomed Brazil’s impressive economic achievements over the last two years. The IMF said that the country has been on a solid recovery path since the economic crisis in 2002, with growth of 5.2 per cent in 2004, and employment growing by 3.2 per cent. The policies of the administration have led to a significant transformation of the economy, which has resulted in a strong economic recovery, income and employment gains, a declining public debt burden, and rising international reserves. The IMF said that despite these successes, vulnerabilities and challenges remain.

They noted that public debt was still high and sensitive to global financial turmoil.

Moreover, directors stressed the need to persevere with structural reforms in order to boost long-term growth prospects, critical to addressing persistent poverty and inequality, the IMF report said.

The IMF said the country’s financial conditions are the best in many years, with bond rates falling sharply, reflecting increased confidence in the South American nation.

While inflation has been tamed to around 7.6 per cent, the IMF supported the central bank’s emphasis on keeping inflation on a downward path, and its cautious approach in the face of sticky inflation expectations and persistently high core inflation.

The International Monetary Fund called for additional measures to promote trade openness, and enhance the efficiency of capital markets.

It also said that the current environment provides a favourable opportunity to address structural weaknesses in the Brazilian economy and reduce poverty and inequality.

These measures may include reform of the tax system, measures to increase budget flexibility, addressing the large remaining imbalances in the pensions system and reforming the labour code “to substantially increase flexibility in labor contracts.

—AFP