Brazil's budgetary balance excluding interest payments was roughly zero. The move to a floating exchange rate has not reduced the need for fiscal and structural reform, although the sharp fall in interest rates has provided some needed room. The challenge ahead is to make progress on longer-term measures, particularly social security reform and the Fiscal Responsibility Act, which limits how much different levels of government in the country can borrow. The imbalances in the social security system have reached nearly 5 per cent of GDP this year and are growing. Social security reform is a very big part of achieving fiscal reform.
Brazil has a strong interest in maintaining an open climate for foreign direct investment.
Foreign direct investment is vital to the nation. It builds factories, introduces new technology, and supports local employment. Much of its progress in this regard has come about because of the government has unleashed the power and efficiency of the private sector and of foreign investment. The important telecommunications, electricity and petroleum sectors have been opened up to private ownership. To continue this success, the authorities need to maintain a friendly environment by ensuring stable and predictable property rights.