Statement by IMF Managing Director Dominique Strauss-Kahn at the Conclusion of His Visit to BrazilPress Release No. 11/65
March 3, 2011
Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), issued the following statement today in Brasília at the conclusion of his visit to Brazil:
“It has been a great pleasure to visit Brazil and meet President Dilma Rousseff, as well as minister Guido Mantega and new central bank governor Alexandre Tombini. I thank them for productive discussions, and the Brazilian authorities for their kindness and hospitality.
“Brazil today embodies many of the challenges confronting emerging market economies. According to figures just released today, the country grew 7.5 percent in 2010, its fastest rate in 25 years. That is an impressive recovery from the 2008–09 crisis and demonstrates that sound economic management over the last decade has increased the resilience of the Brazilian economy to external shocks.
“That resilience is mainly based on the three pillars of fiscal responsibility, inflation targeting and a flexible exchange rate, as well as a skillful use of countercyclical policies during the crisis. A relatively favorable international environment, particularly ample international liquidity and high commodity prices, meant Brazil was able to effectively contain the negative effects of the crisis.
“However, new challenges arise from the success of recent years. In the short term, it will be important to set an appropriate policy mix to contain inflationary pressures and ensure sustainable economic growth over the medium-term, while managing the challenges associated with large capital inflows.
“Over the medium-term, the key challenge is to raise the growth potential of the economy and continue to make progress towards the reduction of poverty and inequality, so as the current prosperity lays the foundation for sustained economic growth that will benefit future generations and help more and more Brazilians to raise above poverty. In this regard, I’d like to highlight four areas where I think the country could make significant advances: 1) tax reform, to increase investment and growth; 2) reducing budget rigidities to help improving public finance management; 3) social security reform, to ensure the long-term sustainability of the regime and create greater incentives for private savings; and 4) improving the business environment, to support Brazil’s plans to boost the potential growth of the economy.
“Given the still challenging external environment, it will be crucial that Brazil continues to play a key role in the international arena, particularly in the G-20. Continued international cooperation is needed to solve global imbalances (such as large and volatile capital flows, exchange rate pressures), prevent future crisis, and avoid individual country measures that could hurt the global recovery. It would be particularly important to resist trade protectionism measures.
“I would like to add that the Fund supports President Rousseff’s emphasis on working towards continuing to reduce poverty in Brazil. There have been substantial improvements in this area over the last decade, which have also been associated with an impressive expansion of the middle class. To know that Bolsa Família is being copied in many countries, including the United States speaks volumes about the program’s positive social impact and macroeconomic solidity.
“Finally, I would like to note that a distinguished Brazilian public servant, Murilo Portugal, steps down tomorrow as Deputy Managing Director of the IMF to return to his home country. On behalf of the IMF and its 187 country members, I would like to thank Mr. Portugal for his service to the international community.”