The Brazilian minister of economy recently announced that Brazil is to become an OECD member in 2021. With the backing of the United States, Brazil has already completed two thirds of the required preparatory work and expects to join the world’s richest nations next year. The announcement confirms the consolidation of the Brazilian economic reform programme.
Paulo Guedes, the Brazilian minister, made his announcement at an online meeting in mid-October. The country’s bid to join comes with backing from the US, a country keen to see Brazil part of the Organisation for Economic Co-operation and Development (OECD).
“We want this to happen as quickly as we can,” said Mike Pompeo, US Secretary of State, quoted in Reuters.
The OECD currently has 37 members who collaborate on key global issues including economy at international and national levels. New members have to undergo and pass a rigorous selection process, of which Brazil has currently completed over 60%.
Preparatory work well underway
Guedes pointed out that Brazil has already made significant advance on aspects such as transparency and protocols for anti-corruption, regulatory procedures and procurement. He stated that the government’s reform programme was back on track after the covid-19 hiatus.
According to Guedes, Brazil is continuing to advance with privatisations and sales of assets as well as introducing fiscal discipline. Deregulation also forms an essential part of the Brazilian reform programme.
To move forward in its bid to become an OECD member, Brazil’s next stage involves one of its largest banks: the state-owned and run Caixa Economica Federal. The bank is the third largest in Brazil and the fifth biggest in Latin America.
Brazil is due to launch the digital side of the bank’s business as an IPO in six months’ time. The digital bank gained 64 million new clients in Brazil after the Caixa made emergency payments during lockdown. They amounted to around 10% of Brazil’s GDP.
This massive influx of new clients means the bank has suddenly grown its customer base, making it an attractive offering for the IPO.
Brazilian economy faring better than expected
Guedes also mentioned the latest figures for the Brazilian economy. He is emphatic that Brazil will end the year with around 4% decrease in GDP. The figure is considerably less than originally expected and lower than many other countries.
In July, the IMF predicted a 9.1% contraction, but Guedes said his better forecast comes on the back of the latest export figures. The weak currency exchange has boosted Brazilian exports this year, translating to better economic performance.
Brazil as OECD member
At BRIC Group, we welcome the news of Brazil’s forthcoming OECD membership in 2021. We believe that it shows that the country has taken economic and fiscal reform seriously. The US backing of the bid boosts Brazil’s intentions still further.
This is excellent news for investors in Brazil as it consolidates the country within the world’s largest economies. It also augurs well for Brazil, already the world’s ninth largest economy, in the near future.