## IMF Staff Completes 2023 Article IV Visit to Brazil

_IMF News, May 16, 2023_

## Source details

**Canonical URL:** [IMF Staff Completes 2023 Article IV Visit to Brazil](https://www.imf.org/en/news/articles/2023/05/16/pr23154-brazil-imf-staff-completes-2023-article-iv-visit)

## Other formats

- [Markdown version](/en/news/articles/2023/05/16/pr23154-brazil-imf-staff-completes-2023-article-iv-visit/index.md)
- [Structured JSON version](/en/news/articles/2023/05/16/pr23154-brazil-imf-staff-completes-2023-article-iv-visit/index.json)
- [Bundle manifest](/en/news/articles/2023/05/16/pr23154-brazil-imf-staff-completes-2023-article-iv-visit/bundle-manifest.json)

## Bibliographic details
- Published: May 16, 2023

---

### Growth outlook
- Growth is projected to moderate this year to 1.2 percent, from 2.9 percent in 2022.
- Growth is expected to improve to 1.4 percent in 2024 and 2 percent over the medium term.
- The outlook is subject to downside risks, but strong buffers support resilience:
  - a sound financial system,
  - large cash buffers by the public sector,
  - adequate international reserves.

### Fiscal position and policy recommendations
- Authorities aim to achieve a primary fiscal surplus of 1 percent of GDP by 2026.
- Staff recommends:
  - a more ambitious fiscal effort that continues beyond 2026 to put debt on a firmly declining path,
  - protecting social and investment spending,
  - enhancing the fiscal framework,
  - further broadening of the tax base,
  - reforms that tackle spending rigidities.
- The approval of the authorities’ indirect tax reform plan would significantly streamline the tax regime and could boost potential output.

### Inflation and monetary policy
- Headline inflation has rapidly declined from last year’s peak, but core inflation remains elevated, while inflation expectations have edged up.
- Headline inflation is expected to converge to the target by mid-2025.
- The monetary policy stance is consistent with reducing inflation to target, in line with the inflation targeting framework.
- Staff observation and suggestions:
  - Consideration could be given to setting a fixed medium-term target in line with regional peers to increase clarity around flexibility when shocks hit the economy and reduce uncertainty.
  - Considering targets on an annual basis is described as a less efficient way to gain flexibility.
  - Adequate FX reserves and the flexible exchange rate remain important shock buffers.

### Financial sector, consumer protection, and payments innovation
- The banking system is sound, the financial sector remains resilient and systemic risks are contained.
- Targeted policy measures and financial literacy initiatives to address pockets of household debt vulnerabilities and protect consumers are welcome.
- A bigger role for public banks should be managed carefully to mitigate risks for fiscal sustainability and monetary policy transmission.
- Notable financial innovation initiatives:
  - Pix, an instant payment system, launched in late 2020.
  - Open Finance environment introduced in 2021.
  - Plans for the Digital Real are expected to underpin a public blockchain infrastructure that fosters financial innovation within a regulated environment.
- These initiatives have increased financial inclusion, efficiency, and competition.

### Green transition and structural agenda
- Authorities are embarking on an ambitious agenda to steer a sustainable, inclusive, and green economy.
- Opportunities for greener growth are considerable, including leveraging Brazil’s competitive advantage in renewable energies.
- The IMF staff supports authorities’ plans to:
  - strengthen climate resilience,
  - halt illegal deforestation,
  - decarbonize the economy.

### Mission details and staff statement
- An IMF team, led by Ana Corbacho, conducted discussions for the 2023 Article IV Consultation during May 2-16, 2023.
- At the conclusion of the visit, Ms. Corbacho issued the staff statement summarizing preliminary findings and recommendations.
- Press Release No. 23/154.

*IMF Communications Department press release, May 16, 2023.*

---


## References

- [Brazil and the IMF](http://www.imf.org/external/country/BRA/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2023/05/16/pr23154-brazil-imf-staff-completes-2023-article-iv-visit_