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Science --- Brazil --- Brazil.

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This paper identifies refinements to the macroeconomic framework that will help Brazil to achieve strong performance in a new environment in which population will age at a rapid pace, heavy reliance on oil resources will increase public revenue volatility and uncertainties regarding the external environment are higher, possibly permanently. More specifically, the country needs to pursue fiscal consolidation and remove existing rigidities in the budget process. Over the medium term, moving to a headline budget target would ensure long-term sustainability of public (including social security) accounts, and introducing an expenditure ceiling and removing widespread revenue earmarking would help restrain expenditure. Adopting the proposals to simplify the tax system currently under discussion would improve the business environment, and the government should persevere in its effort to secure political support for them from the states. A pressing challenge is to adapt current transfer mechanisms to ensure regional and inter-generational equity in sharing oil revenues. The establishment of the social fund, which is designed to save part of the oil windfalls and whose investment returns will be allocated to social spending, could help these equity objectives to be reached, so long as it is well designed. The ongoing surge in capital inflows complicates the task of monetary policy and should be addressed through a range of policies, in which fiscal consolidation features prominently. Additional measures such as macro-prudential policies or a temporary tax on short-term capital inflows could also help to prevent the formation of asset price bubbles. This Working Paper relates to the 2011 OECD Economic Review of Brazil 2011 (www.oecd.org/eco/surveys/Brazil).

Economics --- Brazil

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Brazil under-invested in infrastructure for over three decades, and infrastructure investment rates have come up only slowly since 2007. Infrastructure needs are sizeable in almost all sectors. It is likely that at its current stage of development the country will benefit from large pay-offs from infrastructure spending. Against this background, the Brazilian authorities have put in place a large infrastructure plan named Growth Acceleration Programme (Programa de aceleração do crescimento, PAC). This programme has been rightly protected from the fiscal cuts announced in early 2011. Nevertheless, some changes to the policy and regulatory framework could be introduced to make public investment more cost-efficient and to foster private participation. In particular: • The second stage of PAC needs to focus on completing the most worthwhile programmes. In addition, the public-private partnership framework should be streamlined. • In most areas, the regulatory framework is working well, but sectors are at different stages of development. Despite important institutional changes in recent years, policy capture is sometimes still influencing some federal and many state regulatory agency decisions. • In spite of some recent progress, frequent disputes appear to delay some infrastructure projects, especially in the energy sector. The main challenge in this area is to hasten the licensing process, while continuing to put appropriate emphasis on environmental and social protection. • Reforms have been implemented in individual network industries, but there is still some room to inject competition in fixed-line telecommunications and to prevent product cross-subsidisation in the electricity sector. Concession contracts in both roads and rail could be refined to foster private investment in maintenance and network expansion. In water and sanitation, where investments are the most needed, smaller municipalities should be encouraged to invest and form consortia to reap economies of scale. This Working Paper relates to the 2011 OECD Economic Review of Brazil 2011 (www.oecd.org/eco/surveys/Brazil).

Economics --- Brazil

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This paper identifies refinements to the macroeconomic framework that will help Brazil to achieve strong performance in a new environment in which population will age at a rapid pace, heavy reliance on oil resources will increase public revenue volatility and uncertainties regarding the external environment are higher, possibly permanently. More specifically, the country needs to pursue fiscal consolidation and remove existing rigidities in the budget process. Over the medium term, moving to a headline budget target would ensure long-term sustainability of public (including social security) accounts, and introducing an expenditure ceiling and removing widespread revenue earmarking would help restrain expenditure. Adopting the proposals to simplify the tax system currently under discussion would improve the business environment, and the government should persevere in its effort to secure political support for them from the states. A pressing challenge is to adapt current transfer mechanisms to ensure regional and inter-generational equity in sharing oil revenues. The establishment of the social fund, which is designed to save part of the oil windfalls and whose investment returns will be allocated to social spending, could help these equity objectives to be reached, so long as it is well designed. The ongoing surge in capital inflows complicates the task of monetary policy and should be addressed through a range of policies, in which fiscal consolidation features prominently. Additional measures such as macro-prudential policies or a temporary tax on short-term capital inflows could also help to prevent the formation of asset price bubbles. This Working Paper relates to the 2011 OECD Economic Review of Brazil 2011 (www.oecd.org/eco/surveys/Brazil).

Economics --- Brazil

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Geography --- Brazil.