UPDATE 1-Brazil must do more to meet key fiscal target -IMF
(Adds IMF official comments)
BRASILIA May 12 (Reuters) - Brazil must do more to achieve its 2015 fiscal savings goal and needs deep economic reforms to foster stronger growth, the International Monetary Fund said on Tuesday.
In its annual assessment, the IMF cited government missteps that have dragged the once-booming Brazilian economy toward an expected recession this year, but it endorsed the more orthodox policies of new Finance Minister Joaquim Levy.
An IMF official said it is crucial for Brazil to meet its 2015 primary surplus goal to regain investors' confidence. The primary surplus, or excess revenues before interest payments on debt, is a key gauge of capacity to repay debt.
"Given the weak underlying fiscal position in 2014, the fiscal target of 1.2 percent of GDP for 2015 is appropriate, but further measures will be needed to meet this target," said the report, which was completed on March 4 when the bulk of the savings measures had already been announced.
IMF official told reporters later the size of the upcoming budget freeze will help clarify whether the government needs to tighten the belt further to reach the goal this year.
Faced with crumbling business confidence shortly after re-election in October, President Dilma Rousseff picked fiscal hawk Levy to rebalance public accounts after years of unchecked spending.
Levy has led an unpopular austerity push that has raised taxes on cosmetics and imports, and has severely cut spending on government programs.
Levy has warned the administration is ready to hike taxes again, raising complaints from business and union leaders as well as some politicians who believe austerity will deepen the recession. Continuación...