Challenges to Fiscal Adjustment in Latin America - The Brazilian fiscal adjustment: Structural change and policy continuity, 1995-2004

The following excerpt summarises Chapter 4 of Challenges to Fiscal Adjustment in Latin America: The Cases of Argentina, Brazil, Chile and Mexico by Fabio Giambiagi (IPEA) and Marcio Ronci (IMF), published on 22 February 2006.

After the Real Plan of June 1994, Brazil adopted an impressive series of structural and institutional reforms during the two Fernando Henrique Cardoso administrations (1995-98 and 1999-2002) and the current Luiz Inácio “Lula” da Silva administration (2003-06). These reforms are reflected in a notable fiscal adjustment after 1999. The change in the authorities’ attitude to fiscal austerity, compared with the pre-1999 expenditure-driven stance, has been remarkable, as well as the continuity of the thrust of the structural and institutional reforms implemented during 1995-2004. The political parties now have a reasonable degree of agreement (not unanimity) on the need for fiscal austerity.

This chapter briefly reviews the main structural and institutional reforms implemented during 1995-2004, the fiscal adjustment that took place after 1999 and the main challenges for the future in terms of fiscal sustainability. Its main conclusion is that, after a decade of structural and fiscal adjustment, there is still a need to consolidate the progress achieved so far by building solid fiscal institutions and improving the quality of fiscal adjustment in support of higher, sustainable economic growth.

Public indebtedness
In per cent of GDP

Source: Central Bank of Brazil.

________________________

Return to Challenges to Fiscal Adjustment in Latin America: The Cases of Argentina, Brazil, Chile and Mexico

To access the full version of Challenges to fiscal Adjustment in Latin America: The Cases of Argentina, Brazil, Chile and Mexico:

• Readers at subscribing institutions can go to SourceOECD, our online library.
• Non-subscribers can purchase the PDF e-book and/or printed book at our Online Bookshop. 
• Government officials can go to  OLISnet's Publication Locator.
• Accredited journalists can go to their password-protected website .

For further information please contact the South America Desk at the OECD Economics Department at webmaster@oecd.org.  The OECD Secretariat's report was edited by Luiz de Mello.

_______________________

• Go to the homepage of all  Economic Surveys and Country Surveillance.
• Go to the OECD Economics Department homepage.
• Go to the OECD Mexico website.
• Go to the Economic Survey of Brazil 2005.
• Go to the Economic Survey of Chile 2005.
• Go to Trade and Competitiveness in Argentina, Brazil and Chile: Not as Easy as ABC.