Brazil Expert Report-1.pdf

Over the last decade, the government of Brazil has successfully restored aggregate fiscal discipline with low inflation, through the use of fiscal rules, enhanced expenditure controls, and a high degree of fiscal transparency. The country possesses a well-­‐established legal framework for the formulation, execution and monitoring of the budget, which includes a focus on the medium term. This ensures that fiscal and policy measures are affordable, sustainable and can adjust more smoothly to manage fiscal shocks. Around two-­‐thirds of primary spending is dedicated to the social sectors, including social security. While overall spending increased significantly after 2003, as a share of GDP there has been a significant increase in welfare and social security, health and transport. This is partly explained by the expansion of the pension and unemployment schemes, the Bolsa Familia program and an effort to increase public investment that has had a large focus on the transport sector. Containing social security spending -­‐-­‐ particularly pensions, which topped 7 percent of GDP in 2008 -­‐-­‐ has become a major challenge. The budget is very inflexible with a high level of earmarked tax revenue, social contributions and entitlements. INCRA Brazil Expert Report 19