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Social Security reform is important to reduce inflation and interest rates, says Central Bank’s chairman

During an event in Sao Paulo, Ilan Goldfajn explained how the changes could lead Brazil to a better economic scenario

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The Central Bank’s chairman, Ilan Goldfajn, said that the government’s economic policy and reforms implemented in recent months has changed the perspectives to move the country to positive results. According to him, a continuity in management, especially with an approval of the pension reform, will be important for the fall in interest rates and inflation.

His speech occurs during  Itaú Macro Vision 8th edition, in São Paulo. According Goldfajn, as reforms and adjustments in the economy boosted confidence and reduced the Brazilian economy risk perception. He said as an example of a country change its form for to receive approved by foreign investors.

This indicator, which is a Credit Contract Default (CDS), is a kind of insurance against defaults, presented a “very significant” improvement. It fell from about 500 points in early 2016 to less than half its value. “This shows greater confidence of the researchers in the capacity of solvency of the country, fruit of the reforms and the focus against the inflation and the recovery of the economy”, observed.

Tax reform

Ilan also recalled that an ongoing tax reform, mainly after the approval of public expenditure expenditures, has been favorable. He called these changes decisive for the future functioning of the Brazilian economy.

“The government and the Central Bank work in recent months has been effective in an investment and expectations. Inflation fell from 10.7% in December 2015 to 4.6% in March 2017,” he said.

Goldfajn also explained that a fall in the prices of the economy (Selic) along with measures of structural construction. “A structural and sustainable building of a project to build a set of microeconomic reforms to increase efficiency and production of the economy,” he noted.