BRASILIA -(Dow Jones)- Brazil’s financial and banking systems are strong and stable, but the country needs to develop more long-term financing mechanisms to assure sustained growth, representatives of the International Monetary Fund and the World Bank said Wednesday.
The officials made the recommendations following meetings with local central bank authorities to discuss a financial-sector assessment program report, scheduled for release later this year.
“Capital markets development is still impeded by high interest rates and the short duration of most financial instruments, but aided by stronger public finances and a credible monetary policy in place over a decade, the economy has started to move away from this equilibrium,” they said in a statement following the meeting.
The officials said this movement would continue if inflation remains in decline and domestic savings increase.
“In addition, certain targeted financial sector reforms could reinforce this process, particularly strengthening the role of institutional investors,” they said.
In particular, the officials recommended improving local insurance markets and deepening the role of both closed- and open-ended pension funds to increase the availability of financing mechanisms locally.
IMF and World Bank officials offer evaluations of Brazil’s financial system at five-year intervals under the assessment program at the request of the government.
The next report is scheduled for release in June.
-By Gerald Jeffris, Dow Jones Newswires; 5561-9162-7863; firstname.lastname@example.org
(END) Dow Jones Newswires
March 21, 2012 14:34 ET (18:34 GMT)