BRASILIA, Nov 4 (Reuters) - The Brazilian government needs structural reforms that raise the retirement age and pegs pensions to consumer prices to secure sustainable economic growth ahead, the Organisation for Economic Co-operation and Development (OECD) said on Wednesday.
The Paris-based group praised Brazil’s efforts to tighten fiscal and monetary policies to rebalance the public accounts and regain the confidence of investors, but said those efforts alone were not enough.
Longer-term bottlenecks to more sustainable growth should be overcome “by implementing the structural reforms needed to sustainability raise living standards for all,” the OECD said in its economy survey of Brazil.
Less than a year into her second term, President Dilma Rousseff is under tremendous pressure to pull the Brazilian economy out what is expected to be its worst recession in 25 years. She has unveiled an ambitious fiscal austerity package to plug a widening fiscal deficit, but tensions with her allies in Congress have delayed her efforts and soured the mood of investors in the once booming economy.
Reforms to overhaul one of the world’s most generous pension systems that threatens Brazil’s finances remain a tentative issue among policymakers.
The OECD said her government should also raise directed lending rates to bolster the effectiveness of monetary policy as inflation pierced its 6.5 percent target ceiling and nears double digits. Rousseff could also set fixed-term appointments for the bank’s chief and board members as in other major economies.
The group also recommended a series of reforms to increase the competitiveness of Brazil’s industrial sector such as combining and simplifying state and federal indirect taxes and reducing trade protectionism. (Reporting by Alonso Soto; Editing by Lisa Shumaker)