200101PRI-Brazil Towards a Sustainable Growth Path-Arminio Fraga (1)

7/31/2019 200101PRI-Brazil Towards a Sustainable Growth Path-Arminio Fraga (1)

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2

Overview

1. Recent Developments

2. Longview I: Macro Reforms

3. Longview II: Structural and Micro Reforms

4. Growth Prospects


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3

1. Recent Developments


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5

Fiscal Performance

Flows in 12 months, based on the GDP reviewed on October 2000

Public Sector

(+) deficit (-) surplus

%G

D

P

-6

-4-2

0

2

4

6

8

10

12

14

16

Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Nov

95 96 97 98 99 00

NominalDeficit

Primary

Surplus


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IPCA

1

2-monthvariatio

n

(%)

Consumer Prices

0

5

10

15

20

25

Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Nov

96 97 98 99 00


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Exchange Rate

R$/US$

1.20

1.40

1.60

1.80

2.00

2.20

Jan

99

Mar May Jul Sep Nov Jan

00

Mar May Jul Sep Dec


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8

US$billion

/* (+) deficit

Current Account and FDI

Current account deficit * FDI

12-month variation data

0

5

10

15

2025

30

35

40

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Nov

98 99 00


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10

External Debt / Exports

300

350

400

450

500

550

1995 1996 1997 1998 1999


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Privatization

State banks reform

Public administration reform

Social security reform

Fiscal Responsibility Law

Fiscal Crime Law

Structural Fiscal Reforms


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%G

DP*

Net Public Sector Debt

/* GDP reviewed on October 2000

Medium-Term Fiscal Scenario

43.41

49.68 49.94 49.28

47.60

40

42

44

46

48

50

52

1998* 1999* 2000 2001 2002


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Efficiency and cost reduction

Enhanced public services

Transparency and social control

Managerial reform: the Avana Brasil

Public Administration Reform


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Private workers mandatory regime

Public service regime

Complementary pension regime

Social Security Reform


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Social Security

Social Security Balance - Accumulated in 12 months(R$ billion)

/* (+) deficit

0

2

4

6

8

10

12

D

ec97

M

ar98

Jun98

S

ep98

D

ec98

M

ar99

Jun99

S

ep99

D

ec99

M

ar00

Jun00

ALT


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0.7

0.9

1.1

1.3

1.5

1.7

1999 2002 2005 2008 2011 2014 2017 2020

%G

DP

Previous Scenario

Post-reform Scenario

Social Security Reform

Private Workers Mandatory RegimeAnnual Deficit ALT


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Inflation Targeting

Focus on inflation

Commitment

Transparency


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3.Longview II: Structural and

Micro Reforms


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Education and health

Global integration

Privatization / competitiveness / regulation

Banking reform

Capital markets reform

Tax reform

Longview II: Structural and Micro Reforms


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Net Ground Schooling Rate

Education

Source: MEC/INEP/SEEC

86 %

89 %91 %

93 %

96 %97 %

1991 1994 1996 1997 1998 1999


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Source:IPEA, based upon PNAD

Iliteracy Rate - Brazil 1990-1998% of population at 15 or more years of age

Education

12

13

14

15

16

17

18

19

20

17.2

14.714.7

15.616.4

13.8

1990 1991 1992 1993 1994 1995 1996 1997 1998

18.3


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Education

Source: MEC

Systems Expansion 1995-1999(enrollment increase %)

Basic education 13 %

High school andtechnical education

College education 28 %

57 %


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Health

Infant Mortality Rate(per 1.000 new-born)

47.845.2

43.041.1 39.6 38.4 37.5 36.7 36.1

1990 1991 1992 1993 1994 1995 1996 1997 1998


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GDP per capita

GDP per capita *1962 - 1999

Source: IBGE

In199

9R$

1999

2.000

3.000

4.000

5.000

6.000

1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998

/* GDP reviewed on October 2000


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170

150

130

110

90

70

50

Minimal wage

Basic basket

Source: PROCON/DIEESE

Price variation of the basic basketvis-a-vis variation of the minimal wage

Brazil 1994-2000

InR$


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Proportion of the poor and the indigentsover the total population - Brazil 1977-1998

13.9

20.725.0

9.8

22.119.5

32.7

51.0

45.342.6

28.2

41.7

0

10

20

30

40

50

60

1977 1980 1983 1986 1989 1992 1995 1998

Indigence Line Poverty Line

Source: PNAD (1977-1998) Preparation: IPEA

%o

ftotalpopulation


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Average Import Tariffs

1990 32.2%

1993 16.5%

1997 13.8%

1999 13.8%


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0

1,000

2,000

3,000

4,000

5,000

6,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Source: ABNT (estimated ADTP)

Certificates Issued

ISO 9000

5,285


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2000 - 2003

Sector Total Investment Private Sector(US$ billion)

Telecommunications 45 100 %

Energy 52 86 %

Oil 54 31%

Transportation 23 52 %

Infrastructure Investments

174 68 %Total


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34* estimated Source: MME

Installed Capacity (GW)

Electric Power Generation

54.155.5

57.3

59.2

61.5

64.5

68.0

1994 1995 1996 1997 1998 1999 2000*


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Installed Computers(millions)

Information Technology

2.3

4.0

5.6

6.8

8.3

1995 1996 1997 1998 1999*


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Internet Users(millions)

Information Technology

0.2

0.7

1.4

1.8

2.9

3.4

1995 1997 Jan 98 Jul 98 Dec 98 1999


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Mobile Phones(millions)

Telecommunications

*As of May

0.61.3

2.5

6.0

9.2

15.0

17.5

1994 1995 1996 1997 1998 1999 2000*


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Regulatory agencies

Competition policy

Consumer protection

Intellectual property rights

Environmental legislation

New Regulatory Framework


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Supervision / regulation

Payments System

Financial liberalization

Banking reform


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%

p.y.

Average banking spread

Banking Spread

98 99 00

30

35

40

45

50

55

60

65

70

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Nov


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Corporate Law

Accounting standards

Regulation

Capital Markets Reform


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4. Growth prospects


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Openness

Deregulation

Stabilization

Privatization

Summing up

Competition

Investment

Predictability

Efficiency


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Brazil Towards a Sustainable Growth Path:

Stabilization and Consolidation ofStructural Reforms

January 2001

Documents

200101PRI-Brazil Towards a Sustainable Growth Path-Arminio Fraga (1)