The International Monetary Fund published a staff concluding statement after discussions for the 2026 Article IV Consultation with Brazil, saying the economy is recovering in early 2026 after growth slowed in 2025 under restrictive monetary policy and reduced fiscal support. The IMF projects growth to strengthen gradually to about 2.5 percent over the medium term. Inflation fell through early 2026 but has recently risen on higher global energy prices, and is expected to increase in the near term before converging to the 3 percent target by mid-2028. The statement described downside risks from worsening geopolitical tensions and tighter financial conditions, while noting support from Brazil’s policy frameworks, financial system, reserves and flexible exchange rate. The IMF judged the Central Bank of Brazil’s recent policy easing appropriate, while stressing that the pace and timing of further moves should remain flexible and that clear public commitment to the 3 percent inflation target is needed to anchor expectations. On fiscal policy, it said steps have been taken to improve the fiscal position but argued that more meaningful reforms are needed to put public debt on a firm downward path, including saving oil-related revenue windfalls, providing only targeted temporary support, and reducing spending rigidities and tax expenditures. Referring to the concurrent Financial Sector Assessment Program, the IMF said the financial sector remains resilient and banks are well capitalized and liquid, but urged continued vigilance over household credit risks and stronger banking and securities supervision, including by addressing staffing shortages at the Central Bank of Brazil and reinforcing legal protections. It also pointed to further gains from business environment, competition, labor participation and decarbonization reforms.
International Monetary Fund2026-06-01
International Monetary Fund concludes Brazil Article IV mission and calls for stronger fiscal reforms as growth recovers
The International Monetary Fund’s 2026 Article IV concluding statement on Brazil notes that growth is recovering, with medium-term output projected at about 2.5 percent, and inflation expected to rise near term before converging to the 3 percent target by mid-2028 amid downside risks. It views the Central Bank of Brazil’s recent easing as appropriate but calls for flexible future moves, a clear commitment to the inflation target, and more ambitious fiscal reforms. The concurrent Financial Sector Assessment Program finds the financial system resilient and well capitalized, while recommending closer monitoring of household credit risks, stronger supervision, and broader structural reforms to improve the business environment and support decarbonization.