IMF Executive Board Concludes 2026 Article IV Consultation with Brazil
IMF News, July 23, 2026
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Bibliographic details
- Published: July 23, 2026
Economic outlook and projections
- Growth is projected to rise to 2.4 percent in 2026, before easing in 2027, and to recover to about 2.5 percent over the medium term.
- Factors supporting growth:
- Positive terms of trade associated with higher global oil prices.
- Fiscal support.
- Normalization of monetary policy.
- Structural factors, notably the implementation of the 2023 VAT reform and acceleration in hydrocarbon production.
- Medium-term risks:
- Downside: escalation of geopolitical tensions (especially in the Middle East), higher inflation, tighter financial conditions, lower global demand, global trade tensions, and a weaker-than-envisaged fiscal effort.
- Upside: stronger-than-expected household consumption, faster implementation of productivity-enhancing reforms, and the ecological transformation.
Inflation and monetary policy
- Inflation forecast:
- Expected to reach 5.6 percent by end-2026.
- Gradually converging to the 3 percent target by mid-2028.
- Monetary stance:
- Interest rate cuts have been consistent with Brazil’s inflation targeting framework.
- A slower normalization of monetary policy than expected before the Middle East war was considered appropriate.
- Monetary policy should remain data-dependent and flexible amid elevated global uncertainty.
- A stronger fiscal stance would support disinflation and pave the way for lower interest rates.
- Exchange rate and reserves:
- The flexible exchange rate regime and adequate international reserves remain important shock absorbers.
- Recommendation to phase out the multiple currency practice and exchange restriction arising from the financial transaction tax.
Fiscal policy, public debt, and recommendations
- Main fiscal guidance:
- To put public debt on a firmly downward path and open space for priority investments, save oil-related revenue windfalls and implement a more ambitious fiscal effort, while protecting targeted social spending.
- Specific policy measures suggested by Directors:
- Save oil-related revenue windfalls.
- Reduce spending rigidities.
- Enhance expenditure efficiency.
- Phase out inefficient tax expenditures.
- Strengthen the fiscal framework, including:
- Comprehensive spending limits.
- A binding medium-term debt anchor.
- Linking spending growth to structural revenues.
- Incorporate oil price volatility considerations into the fiscal framework.
- Fiscal and debt indicators (selected, exact values preserved):
- Central government primary balance (national representation, incl. BCB) 4/: -2.4 (2023), -0.4 (2024), -0.5 (2025), -0.2 (2026), 1.0 (2027), 1.1 (2028).
- General government NLB primary balance: -2.2 (2023), -0.3 (2024), -0.1 (2025).
- General government NLB structural primary bal. (in percent of potential GDP): -1.8 (2023), -1.9 (2024), -0.8 (2025), -1.3 (2026), -0.6 (2027).
- General government NLB: -7.7 (2023), -6.3 (2024), -7.4 (2025), -8.2 (2026), -7.0 (2027), -6.0 (2028), -5.9 (2029), -5.7 (2030).
- Net public sector debt: 60.4 (2023), 61.3 (2024), 65.2 (2025), 72.3 (2026), 75.0 (2027), 77.4 (2028), 79.3 (2029), 80.1 (2030), 80.4 (2031).
- General government gross debt, Authorities’ definition: 73.8 (2023), 76.3 (2024), 78.6 (2025), 86.6 (2026), 88.7 (2027), 90.8 (2028), 92.5 (2029), 94.1 (2030).
- General government gross debt: 84.0 (2023), 87.0 (2024), 93.3 (2025), 97.8 (2026), 100.0 (2027), 102.0 (2028), 103.7 (2029), 104.8 (2030), 105.3 (2031).
Financial sector resilience and supervision
- Assessment:
- The 2026 Financial Sector Assessment Program (FSAP) found the financial sector remains resilient with systemic risks contained.
- Banks are well‑capitalized and liquid.
- Recommendations:
- Further strengthen banking and securities market supervision, including completing the bank resolution framework and enhancing supervisory capacity.
- Continue deployment of the macroprudential toolkit and take additional steps to address rising household indebtedness.
- Strengthen crypto asset regulation and address cybersecurity risks.
Structural reforms, labor, trade, and climate agenda
- Structural priorities supported by Directors:
- Continued implementation of the landmark 2023 VAT reform.
- Improvements in the business environment and stronger governance.
- Greater labor force participation, particularly among women.
- Strengthening anti‑corruption and AML/CFT frameworks.
- Advancing skills development and AI adoption.
- Continued implementation of the Ecological Transformation Plan.
- Deepening and diversifying trade linkages, including through recent trade agreements.
- Directors positively noted Brazil’s leadership in the climate agenda and commitment to multilateralism.
Key social, demographic, and macroeconomic indicators (selected exact figures from Table 1)
- Social and demographic:
- Area (thousands of sq. km.): 8,510
- Population (2025, est.) Total (millions): 213.4
- Population annual rate of growth (percent): 0.4
- Density (per sq. km.): 25.1
- Life expectancy at birth (years): 76.6
- Infant mortality (per thousand live births): 12.3
- Poverty rate (in percent, 2024) 2/: 23.1
- GDP per capita (2025): US$10,683
- GDP, local currency (2025): R$12,739 billion
- GDP, dollars (2025): US$2,280 billion
- Selected economic indicators (annual percent changes and levels):
- GDP at constant prices: 3.2 (2023), 3.4 (2024), 2.3 (2025), 2.4 (2026), 2.2 (2027), 2.5 (2028 implied in narrative medium term).
- Consumption: 4.5 (2023), 1.5 (2024), 1.9 (2025), 1.8 (2026).
- Investment (GFCF): -3.0 (2023), 6.9 (2024), 2.9 (2025), 4.1 (2026), 0.7 (2027), 2.1 (2028).
- Consumer prices (IPCA, end of period): 4.6 (2023), 4.8 (2024), 4.3 (2025), 5.6 (2026), 3.1 (2027).
- Gross national saving (percent of GDP): 21.8 (2023), 19.6 (2024), 21.2 (2025), 22.5 (2026), 21.3 (2027), 20.4 (2028), 20.5 (2029), 20.3 (2030).
- Current account (percent of GDP): -1.2 (2023), -2.9 (2024), -2.5 (2025), -2.1 (2026), -1.7 (2027).
- Trade balance (percent of GDP): 3.0 (2023), 2.6 (2024).
- Exports (percent of GDP): 15.7 (2023), 15.4 (2024), 14.7 (2025), 14.1 (2026), 13.9 (2027).
- Imports (percent of GDP): 11.5 (2023), 12.5 (2024), 11.9 (2025), 11.1 (2026), 10.9 (2027).
- Total external debt: 33.4 (2023), 32.8 (2024), 35.9 (2025), 31.5 (2026), 29.5 (2027), 28.3 (2028), 27.1 (2029), 25.9 (2030).
- Output Gap: 0.6 (2023), 1.3 (2024), 0.8 (2025), 0.5 (2026), 0.2 (2027), 0.1 (2028), 0.0 (2029).
- SELIC policy rate, end of period: 11.8 (2023), 15.0 (2024), 14.0 (2025), 9.3 (2026), 6.8 (2027), 7.2 (2028).
- Gross official reserves (in US$ billions): 355 (2023), 330 (2024), 358 (2025).
Press Release No. 26/257, July 23, 2026.