By Raúl Ferro:

Brazil begins the New Year with a new president. Dilma Rousseff, a former guerrilla and a politician who is close to outgoing President Luiz Inacio Lula da Silva, takes the reins at a pinnacle moment for Brazil.

The country is in fashion. It is the only Latin American member of the famous BRIC group, and its economy will soon become the seventh largest in the world, according to projections by investment banks. The Sao Paulo stock exchange, Bovespa, is one of the largest in the world. And what is especially important is that all this has been achieved under a consolidated democratic system

These achievements are the result of 15 years of economic liberalization. Since then finance minister Fernando Henrique Cardoso launched the Real Plan in 1994 to stabilize the economy, Brazil has done nothing but progress. After becoming president in 1995, Cardoso launched reforms that included multimillion-dollar privatizations that changed the face of the economy and business in the country. After two terms as president, Cardoso handed over office on January 1, 2003 to Lula, a union leader who controlled the Workers Party (PT), and he continued the free market policies of his predecessor, who also came from the center left.

Consequently, Brazil has enjoyed macroeconomic stability unthinkable in the early 1990s. From being one of the biggest sovereign debtors on the planet, today Brazil is a net creditor, and its international reserves stand at around US$280bn. In 2008 the country was awarded the coveted investment grade rating. Millions of people have joined the country's middle class, which in 2003 accounted for 37.6% of the population but today represents 49.2%.

We also need to mention the development of Brazil's oil industry in recent years. Relatively efficient management of federal energy company Petrobras means Brazil is no longer a net oil importer. Nature has also been generous, with the discovery of the pre-salt hydrocarbon deposits, endowing Brazil with some of the largest reserves in the world.

These results are commendable but not sufficient. Brazil has been able to build a stable economy, which is a great achievement. But it needs to strengthen, and deepen its reforms. The growth rates of the South American country are modest. Between 1995 and 2009 Brazil's economy averaged annual growth of only 2.9%. And for the 2010-13 period, the IMF projects yearly growth of 4.5% on average, well below its Asian partners in the BRIC club.

The task for the new Brazilian president, also of the PT party, is clear. She needs to improve the competitiveness of the country, which means not only deepening the economic reforms initiated in the mid-1990s, but also implementing drastic institutional changes, ranging from the complex tax structure to further reform of the judiciary, reducing the levels of corruption plaguing the country. Another story is the struggle against violence and organized crime, with the events in some favelas in Rio de Janeiro in late 2010 indicating the size of the task ahead.

In the "Democracy, Markets and Transparency" report by the Center for the Opening Up and Development of Latin America (Cadal), a think tank based in Buenos Aires, Brazil is ranked 57 out of 169 countries and surpassed by six Latin American nations - Chile (which ranks first among Latin American nations and 16th overall), Uruguay, Costa Rica, Panama, El Salvador and Peru.

So it's not going to be an easy task for Rousseff. The new president even needs to counter the effects of the very success of the country - the massive inflow of foreign investment which has led to a sharp appreciation of the real - while controlling the inflationary pressures experienced by the Brazilian economy without cooling the economy too much, among many other things. In principle, the composition of the new cabinet points to the continuity of the economic policies of recent years. It's a good start, but the president and her staff will need to go beyond what their predecessors have achieved.

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