Brazil and the IMF
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Statement by IMF Fiscal Affairs Department Director Teresa Ter-Minassian on Brazil's Three-Year Public Investment Pilot Program
Over the last few months, the Brazilian authorities have discussed with staff of the International Monetary Fund, the World Bank, and the Inter-American Development Bank, options for improving the quality and efficiency of public investment in Brazil, within an overall framework of fiscal and macroeconomic sustainability. Toward this objective, the Brazilian authorities have proposed a pilot program for selected public investment. This program will provide additional financial resources, equivalent to about US$1 billion a year over three years (2005-2007) for infrastructure and other public investment projects that have potentially strong macroeconomic and fiscal payoffs over the medium term, consistent with a sound and sustainable fiscal stance. The pilot program does not entail changes in how fiscal outturns are computed, nor does it imply the exclusion of specific expenditures from the fiscal primary balance.
The public investment projects included in the pilot program have been identified by the Brazilian government through a strengthened selection process, and will be subject to improved procedures for implementation and monitoring. Full budgetary funding of the projects will be linked to implementation of the improved procedures, thereby increasing the likelihood that the investments will be completed on schedule. The Brazilian authorities intend to evaluate the pilot at the end of 2005, to learn from the experience with the new procedures, and to progressively extend them to other public investment.
The staff of the IMF welcomes the progress made by the Brazilian authorities in advancing their pilot program for public investment. It shares their view that this program is an important first step toward strengthening existing systems of appraisal, selection, implementation and monitoring of public investments, with the aim of improving the quality and efficiency of the budget. The staff also welcomes the authorities' intention to publish the pilot program reports, and looks forward to a continuing dialogue with the authorities, in cooperation with the World Bank and the IDB, regarding further actions to strengthen public investment in Brazil.
IMF EXTERNAL RELATIONS DEPARTMENT