IMF Executive Board Concludes 2025 Article IV Consultation with Brazil
IMF News, July 17, 2025
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- Published: July 17, 2025
Overview
- The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Brazil on July 14, 2025.
- The authorities have consented to the publication of the Staff Report prepared for this consultation.
- Press Release No. 25/252.
Growth and inflation outlook
- Brazil’s economy grew strongly over the past three years, surprising on the upside, and is showing signs of moderation.
- Growth projections:
- 3.4 percent in 2024.
- 2.3 percent in 2025 (projected).
- 2.5 percent over the medium term (forecast).
- Inflation projections:
- Inflation expected to reach 5.2 percent by end-2025.
- Inflation expected to gradually converge to the 3 percent target by end-2027.
- Drivers:
- Recent expansion reflected strong consumption supported by fiscal stimulus and supply-side factors.
- Medium-term support from normalization of monetary policy, implementation of the efficiency-enhancing VAT reform, and acceleration in hydrocarbon production.
- Short-term dynamics:
- Growth to moderate in the near term amid tight monetary and financial conditions, a scaling back of fiscal support, and heightened global policy uncertainty.
Executive Board assessment and policy recommendations
- Executive Directors welcomed strong growth performance, falling unemployment and poverty, and progress in structural reforms.
- Key recommendations and assessments:
- Continue ensuring convergence of inflation to target and secure fiscal sustainability.
- Further fiscal steps recommended to put public debt on a firm downward path, facilitate a lower path of interest rates, and open space for priority investments.
- Mobilize revenues, including rationalizing inefficient tax expenditures and tackling budget rigidities.
- Ongoing VAT reform considered beneficial to simplify the tax system and boost productivity.
- Recommend personal income tax reforms to enhance progressivity and domestic revenue mobilization.
- An enhanced fiscal framework with a strong medium-term anchor would reinforce credibility and sustainability.
- Commended the Central Bank of Brazil’s (BCB) commitment to price stability; monetary policy tightening starting September 2024 judged appropriate and consistent with bringing inflation back to the 3 percent target.
- Continued credibility of fiscal and monetary policy frameworks important for anchoring inflation expectations.
- Flexible exchange rate regime and adequate FX reserves seen as valuable shock buffers.
- Encourage authorities to continue to gradually phase out the financial transaction tax to eliminate a multiple currency practice.
Financial sector and macro-financial risks
- Financial system assessment:
- Financial system remains resilient; banks are highly liquid and adequately capitalized.
- Commendation for regulatory changes aimed at further strengthening financial sector resilience.
- Risks and monitoring:
- Encourage close monitoring and oversight of household credit risks, including in light of the recently enhanced private payroll loan program.
- Commendation for leadership in the financial innovation agenda promoting inclusion, efficiency, and competition.
- Suggestion that greater administrative and financial autonomy for the BCB would support technological innovation progress.
Structural reforms, social inclusion, and environment
- Structural and social priorities:
- Commended authorities’ leadership in multilateral cooperation and implementation of Brazil’s Ecological Transformation Plan.
- Note that Brazil is on track to meet its Nationally Determined Contribution targets and has made progress in reducing deforestation.
- Emphasized continued efforts to simplify regulations, strengthen anti-corruption and AML/CFT frameworks, increase labor force participation (especially for women), and facilitate skills upgrading to raise medium-term growth and extend social inclusion gains.
Risks to the outlook
- Balance of risks to growth: tilted to the downside amid heightened global policy uncertainty.
- Specific upside risks:
- Near term: stronger-than-expected household consumption amid a still tight labor market.
- Medium term: faster implementation of productivity-enhancing reforms and the Ecological Transformation Plan.
- Specific downside risks:
- External: slowdown in major economies amid heightened global trade tensions and policy uncertainty.
- Domestic: larger-than-expected effects from monetary policy tightening; possibility of a lower-than-envisaged fiscal effort which could increase policy uncertainty, raise borrowing costs, weaken investment, and lower growth.
- Risks to inflation outlook: broadly balanced.
Selected key statistics (as presented in Table 1)
- Social and demographic indicators:
- Area (thousands of sq. km.): 8,510
- Agricultural land (percent of land area): 30.2
- Physicians per 1000 people (2024): 2.8
- Hospital beds per 1000 people (2024): 2.5
- Population (2024) total (millions): 212.6
- Population annual rate of growth (percent): 0.4
- Density (per sq. km.): 25.0
- Adult illiteracy rate: 5.4
- Unemployment rate 7/: 6.9
- Net enrollment rates, percent in primary education: 99.4
- Net enrollment rates, percent in secondary education: 92.2
- Life expectancy at birth (years): 76.4
- Infant mortality (per thousand live births): 12.5
- Poverty rate (in percent, 2023) 2/: 27.4
- GDP, local currency (2024): R$11,745 billion
- GDP, dollars (2024): US$2,171 billion
- GDP per capita (2024): US$10,214
- Palma ratio (2023) 3/: 3.6
- Gini coefficient (post taxes and transfers, 2024): 50.6
- Main export products: airplanes, metallurgical products, soybeans, automobiles, electronic products, iron ore, coffee, and oil.
- National accounts and prices (selected annual rates and levels):
- GDP at constant prices: 2023: 3.2; 2024: 3.4; 2025 (Proj.): 2.3; 2026 (Proj.): 2.1; 2027 (Proj.): 2.2; 2028 (Proj.): 2.4.
- Consumption: 2023: 4.2; 2024: 1.6; 2025 (Proj.): 1.9.
- Investment (GFCF): 2023: -3.0; 2024: 1.3; 2025 (Proj.): 1.4; 2026 (Proj.): 1.8.
- Consumer prices (IPCA, average): 2023: 4.6; 2024: 4.4; 2025 (Proj.): 5.3; 2026 (Proj.): 3.3; 2027 (Proj.): 2.9.
- Consumer prices (IPCA, end of period): 2023: 4.8; 2024: 5.2; 2025 (Proj.): 3.8; 2026 (Proj.): 3.0.
- Gross domestic investment (private sector): 12.0; 12.8; 12.6; 12.4; 12.3 (years aligned in table).
- Gross national saving: 21.8; 19.6; 22.2; 21.3; 19.9; 18.9; 18.6; 18.4 (years aligned in table).
- Central government primary balance (national representation, incl. BCB) 4/: 2023: -2.4; 2024: -0.4; 2025 (Proj.): -0.6; 2026 (Proj.): 0.3; 2027 (Proj.): 0.8; 2028 (Proj.): 1.2.
- General government NLB primary balance: 2023: -2.2; 2024: -0.2.
- General government NLB structural primary balance (in percent of potential GDP): -1.5; -1.4; -0.9; -0.5; 0.2 (years aligned in table).
- General government NLB: -7.7; -6.2; -8.5; -7.6; -5.1; -4.8; -4.6.
- Net public sector debt: 60.4; 61.5; 65.7; 70.2; 72.6; 74.0; 74.7; 74.3 (years aligned in table).
- General government gross debt, Authorities’ definition: 73.8; 76.5; 80.9; 84.5; 86.4; 87.4; 87.8.
- General government gross deb: 84.0; 87.3; 91.6; 95.5; 97.6; 98.6; 99.0; 98.9.
- Of which: Foreign currency linked: 4.5; 4.7.
- Bank loans to the private sector: 7.0; 11.3; 9.2; 7.5; 6.6 (years aligned in table).
- Trade balance (US$ billions): 92.3; 65.8; 60.7; 64.8; 67.4; 70.8; 73.5; 76.6.
- Exports (US$ billions): 343.8; 339.9; 342.1; 350.1; 360.3; 373.3; 386.8; 400.3.
- Imports (US$ billions): 251.5; 274.0; 281.5; 285.3; 292.9; 302.5; 313.4; 323.8.
- Current account (US$ billions): -27.9; -61.2; -51.6; -51.4; -51.3; -52.4; -53.0.
- Foreign direct investment (net inflows): 37.3; 46.8; 48.4; 50.5; 54.4; 56.5; 58.7.
- Total external debt (in percent of GDP): 33.4; 33.1; 34.7; 35.4; 35.2; 34.9; 34.5; 34.0.
- Gross official reserves (in US$ billions): 355; 330.
- REER (annual average in percent; appreciation +): 4.9; -4.2.
Notes on methodology and sources
- Sources cited in the table: Central Bank of Brazil, Ministry of Finance, IBGE, IPEA, and Fund staff estimates.
- Footnotes in the original table clarify definitions and data coverage (selected footnotes reproduced in table headings).
IMF Communications Department. Press Release No. 25/252. July 17, 2025.