Journal Issue

Brazil: Staff Report for the 2014 Article IV Consultation—Informational Annex

International Monetary Fund. Western Hemisphere Dept.
Published Date:
May 2015
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Fund Relations

(As of December 31, 2014)

Membership Status: Joined January 14, 1946; Article VIII

General Resources Account:

SDR MillionPercent Quota
Fund holdings of currency (Exchange Rate)3,641.6885.68
Reserve Tranche Position608.9014.33
Lending to the Fund
New Arrangement to Borrow1,045.04

SDR Department:

SDR MillionPercent of Allocation
Net cumulative allocation2,887.08100.00

Outstanding Purchases and Loans: None

Financial Arrangements:

TypeDate of ArrangementExpiration DateAmount ApprovedAmount Drawn
(SDR Million)
Stand-by09/06/200203/31 /200527,375.1217,199.64
Of which: SRF09/06/200209/05/20037,609.697,609.69
Of which: SRF09/14/200109/05/20029,950.879,950.87
Of which: SRF12/02/199812/01/19999,117.366,512.40

Projected Payments to the Fund (SDR million; based on existing use of resources and present holdings of SDRs):


Safeguards Assessments: A safeguards assessment of the Banco Central do Brasil (BCB) was completed in June 2002 and updated in March 2005.

Exchange Rate Arrangement: Since January 18, 1999, Brazil’s de facto and de jure foreign exchange regime has been classified as floating. Brazil accepted the obligations of Article VIII, Sections 2(a), 3, and 4, effective November 30, 1999.

Staff has determined that the tax on financial transactions (Imposto sobre Operações Financeiras, IOF) of 6.38 percent on exchange transactions carried out by credit card, debit card, and traveler’s checks (including cash withdrawals) companies in order to fulfill their payment obligations for purchases of goods and services abroad by their customers gives rise to multiple currency practices (MCP) subject to Fund jurisdiction under Article VIII, Sections 2(a) and 3. In January 2008, the IOF for these exchange transactions was raised to 2.38 percent and then further increased to 6.38 percent in March 2011. The scope of operations was expanded to other foreign exchange transactions than with credit cards in December 2013.

Last Article IV Consultation

The last Article IV consultation with Brazil was concluded by the Executive Board on July 26, 2013. Brazil is on the 12-month cycle. Joint Fund/World Bank missions visited Brazil in 2002 for the Financial Sector Assessment Program (FSAP), which was discussed by the Board in December 2002. A FSAP Update mission took place in March 2012.

Technical Assistance

Fiscal Affairs Department (FAD). In September 2001, an FAD mission conducted a fiscal ROSC, and in December 2001 a mission provided Technical Assistance (TA) on tax reform. Subsequent missions have discussed the scope for increasing investment in infrastructure within a framework of continued fiscal responsibility, including during a follow-up visit in November 2004. In July 2008, a ROSC on fiscal transparency was undertaken for the state of São Paulo, which also received a seminar on performance budgeting in November 2008. In December 2009 a mission visited São Paulo to examine the state’s medium-term expenditure framework with the purpose of improving fiscal performance and the quality of public expenditure. In November 2010, a short-term expert visited São Paulo to provide advice on cost accounting and a long-term advisor was installed in February 2011 to support efforts in this area. In April a follow-up mission evaluated progress in implementing the program budgeting and cost accounting systems. In May 2011, a short-term expert followed-up on the implementation of the program budgeting reforms. Between July 2011 and November 2014, FAD conducted several missions on public financial management, focusing on the review of the cost accounting systems and on improvements to the budgeting system in the State of São Paulo.

Statistics Department (STA). Several missions have visited Brazil during 1998–2014 to provide TA on monetary and financial statistics, annual and quarterly national income accounts, and government finance. These missions also assisted the authorities in the subscription to the SDDS, improving the analytical quality of Brazil’s monetary aggregates, the development of quarterly sectoral accounts and balance sheets and the implementation of GFSM 2001. Recent missions have assisted the Ministry of Finance, the Banco Central do Brasil and the Instituto Brasileiro de Geografia e Estatística with the compilation of government finance statistics, price indices and the new national accounts framework, with greater emphasis on the consistency across macroeconomic statistics.

Monetary and Capital Markets Department (MCM). Missions visited Brazil in 2000 to assess observance of the Code of Good Practices on Transparency in Monetary and Financial Policies and compliance with the Basel Core Principles for Effective Banking Supervision. In August and December 2009, missions visited to assist the capital markets regulator (CVM) in considering mutual funds development and regulation, and issues surrounding securitization and valuation of financial securities. A mission visited in August 2009 to work on credit risk modeling for financial oversight. In March 2010 a mission visited the National Treasury to initiate a technical cooperation project on term-structure modeling and debt management. A follow up mission to present preliminary results took place in January 2011. The project was completed in May 2011 with the publication of an IMF working paper (No. 11/113), “On Brazil’s Term Structure: Stylized Facts and Analysis of Macroeconomic Interactions.”

Resident Representative

The Fund maintains a resident representative office in Brasilia. The Resident Representative is Mr. Fabian Bornhorst, who assumed the post in April 2014.

Relations with the World Bank1

The World Bank approved its Country Partnership Strategy (CPS) for Brazil for FY 2012–15 in November 2011. The CPS built on, and deepened, the last FY 2008–11 Country Strategy. The main objective of the World Bank Group (WBG) program during this period has been to make a catalytic contribution to Brazil’s efforts to eradicate poverty and to become a more prosperous and inclusive country. The World Bank Group has been a valued partner for Brazil, providing integrated and often multi-sector development solutions tailored to its needs. The Bank has also benefited greatly from Brazil’s unique demands, which required the WBG to adapt and learn and provided a broad range of lessons on development for the Global Community in areas ranging from poverty reduction to social inclusion and environmental management.

In August 2014, the World Bank approved the progress report for the CPS. The Progress Report found that, while the rapid growth expected at the outset of the CPS period had been more elusive than expected, Brazil achieved significant success in reducing poverty and promoting shared prosperity in an inclusive and sustainable manner, with the support of Bank programs. Brazil remains one of the World Bank Group’s most important partners, drawing on significant financial, knowledge and convening services of all the Bank Group entities; testing innovative new instruments and multi-sectoral approaches to solving development problems.

Brazil’s priorities for its partnership with the WBG are focused on second-generation development problems that require innovative solutions. At the request of the government, the FY 12-15 CPS program has continued to strengthen the focus on sub-national entities, combining analytical and technical support at the federal level with the IBRD’s largest lending program, implemented mostly through multi-sectoral operations at the subnational level. The program also provides significant knowledge, advisory, convening and South-South activities in order to address second generation development issues and to share the lessons of Brazil across the globe. The Bank’s work has focused on supporting catalytic investments and policy reforms whose impact can be enhanced through replication and that benefit from the Bank’s unique blend of financial and knowledge services. The heavy emphasis on multi-sector approaches reflects the multi-dimensional nature of addressing key development problems presented by the needs of country counterparts. The key building blocks of the strategy—its 4 strategic objectives and 14 results areas—remain relevant to, and well aligned with government priorities. The strategic objectives are focused on addressing key development challenges and are mutually reinforcing. They are: (i) increasing the efficiency of public and private investment; (ii) enhancing service provision to poorer segments of the population; (iii) reducing regional economic disparities; and (iv) improving sustainable natural resource management and climate resilience.

IBRD lending program was US$2.019 billion for FY 14, and is programmed at US$1.5 billion for FY 15. While this is in line with previous years, it is equivalent to less than 0.3 percent of total public expenditures. IFC’s investment program is forecast at about US$1.7 billion in FY 15, a minute fraction of total private sector investment. Thus, the WBG impact in Brazil cannot be derived exclusively from the size of its financial contributions, which are bound to be small with respect to the country’s own resources. Rather, the WBG is seeking to have a development impact in Brazil through the knowledge contributions that it will embed in its various activities. In particular, the Bank Group deploys its resources according to the following principles. Flexibility: Adjusting areas of engagement and instruments to better respond to the country’s evolving needs. Selectivity: Focusing on areas where Brazil faces second-generation development challenges and can benefit most from the Group’s knowledge and experience. Innovation: Supporting innovative investments and policy reforms that can be replicated locally and internationally, and offering innovative services and instruments (e.g. result-based and multi-sector loans, partial credit risk and other guarantees). Leveraging: Increasing the use of leveraged resources from government, the private sector and other development partners, to maximize development impacts.

IFC will continue responding to the needs of a rapidly-evolving private sector with a suite of competitive financial and advisory products. IFC’s investment portfolio in Brazil now stands at US$4.3 billion, including US$1.7 billion from syndications, making it the Corporation’s third largest country program. IFC new commitments totaled US$2 billion in FY 13, including an IFC member-state record of US$514 million in equity. In FY 14 they reached US$1.8 billion. Looking forward, the commitment target for FY 15 is US$1.7 billion with investments geared toward: infrastructure, telecom, health, education, agribusiness and financial institutions, supporting the country in financial inclusion, urbanization, competitiveness and sustainable management of natural resources. In addition to its investment projects, IFC has provided Brazil’s fast-growing private sector with various advisory services, including a partnership with BNDES for public-private partnerships (PPP).

MIGA has recently processed its first exposure transaction in Brazil since FY 09. While MIGA has had no exposure in the Brazil in recent years, it views Brazil as a target market, where it can support the government’s agenda of meeting the country’s massive infrastructure requirements, through the provision of guarantees of Non-Honoring Financial Obligations (NHSFO) in respect of financial payment obligations of the sovereign, sub-sovereign and state-owned enterprises. These products provide credit enhancement to borrowers to enable them to (i) reduce their funding costs, (ii) increase their access to long-term financing, and (iii) diversify their financing sources. A case in point is the São Paulo Sustainable Transport Project. MIGA’s NHSFO guarantee, which was approved by the Executive Directors in April 2014, will mobilize long-term commercial bank financing on competitive terms, by guaranteeing the State of São Paulo’s financial obligations under such bank financing. Brazil will also be the first IBRD beneficiary of the Bank Group’s effort to take advantage of synergies across the balance sheets of World Bank Group entities. Brazil will gain about US$100 million in additional IBRD lending headroom through an exchange of existing IBRD exposure to Brazil, where MIGA has the capacity to assume higher exposure, for MIGA exposure to Panama, a country where IBRD has available capacity.

Brazil: World Bank-Fund Country Level Work Program Under JMAP
Provisional Timing of MissionsExpected Approval / Delivery Date
World Bank work program in the next 12 months
A. Development policy lending
1. Manaus Service Delivery - Development Policy Lending (DPL)May-15
2. Sergipe 2nd - Development Policy Lending (DPL)Jul-15
3. Piauí Productive and Social Inclusion - Development Policy Lending (DPL)Sep-15
4. Recife Municipal - Development Policy Lending (DPL)Nov-15
B. Investment Lending 1/
1. Dedicated Grand Mechanism (DGM) for Indigenous people - Investment Project Financing (IPF)Feb-15
2. Brazil Investment Plan - Investment Project Financing (IPF)Feb-15
3. ProCerrado Federal Project - Investment Project Financing (IPF)Feb-15
4. Alagoas Poverty Inclusion - Investment Project Financing (IPF)Apr-15
5. Salvador Social Project - Investment Project Financing (IPF)May-15
6. Teresina Municipal - Investment Project Financing (IPF)May-15
7. Pernambuco Education SWAP - Investment Project Financing (IPF)May-15
8. Bahia Regional Transport Development - Investment Project Financing (IPF)Jul-15
9. Piauí Service Delivery - Investment Project Financing (IPF)Aug-15
10. Paraíba Sustainable Rural Development - Investment Project Financing (IPF)Jul-15
10. Fortaleza Sustainable Urban Development - Investment Project Financing (IPF)Dec-15
11. Bahia State Entrepreneurship and Economic Autonomy Among Women - Investment Project Financing (IPF)Dec-15
12. Market Instrument for Brazilian Climate Change Policy - Investment Project Financing (IPF)FY 16
13. Environment Regulations of Rural Lands in the Cerrado - Investment Project Financing (IPF)Feb-15
D. Analytical Advisory Services
1. World Without Poverty (WWP) Learning Initiative - Programmatic Approach (PA)Jun-15
2. Brazil Post-2020 Policy Scenarios for Emissions Reductions - Technical Assistance (TA)Mar-15
3. Pensions Brazil - Technical Assistance (TA)May-15
4. Urban Violence Prevention Brazil - Technical Assistance (TA)Jun-15
5. Brazil Rural Water Supply - Technical Assistance (TA)Jun-15
6. South-South Cooperation - Technical Assistance (TA)Jun-15
7. Development of Systems to Prevent Forest Fires - Technical Assistance (TA)Jun-15
8. Institutional and Financial Development Model for the São Francisco Waterway - Reimbusable Technical Assistance (RAS)Feb-15
9. Involuntary Resettlement - Reimbusable Technical Assistance (RAS)Mar-15
10. Fed Logistics and High Speed Train - Reimbusable Technical Assistance (RAS)Apr-15
11. São Paulo Public Private Partnerships (PPP) - Reimbusable Technical Assistance (RAS)Jun-15
12. Sustainable Vision for Rio Metropolis - Technical Assistance (TA)Aug-15
13. Brazil – Extension of the School Day - Technical Assistance (TA)Aug-15
14. 3rd Baixo do Irece Irrigation Project Reimbusable Technical Assistance (RAS)FY 16
15. Brazil RAS Dam Safety - Technical Assistance (TA)FY 16
16. Brazil Agriculture Risk Management - Programmatic Approach (PA)FY 16
Country Studies Pipeline
1. Brazil Urban Poverty and Vulnerability - Economic and Sector Work (ESW)Feb-15
2. Metropolitan Governance - Economic and Sector Work (ESW)Mar-15
3. RDC Study - Economic and Sector Work (ESW)Mar-15
4. Brazil Skills and Jobs - Economic and Sector Work (ESW)Apr-15
5. Brazil Drought Preparedness and Climate - Economic and Sector Work (ESW)May-15
6. Brazil Chronic Disease and Health System - Economic and Sector Work (ESW)May-15
7. Trust Fund (TF) - Pacto Pela Vida PSIAJun-15
8. Tocantins Rural Roads - Impact Evaluation (IE)Mar-15
9. Recife Teacher Effectiveness - Impact Evaluation (IE)Jun-15
10. Multi-sector Knowledge at the Service of the Favelas (Impact Evaluation)Dec-15
11. Brazil: Systematic Country Diagnostic (SCD)Aug-15
IMF work program in the next 12 months
A. Staff visitMay-15
B. Article IV missionOct-15Dec-15

All lending is subject to confirmation from new authorities

All lending is subject to confirmation from new authorities

Relations with the Inter-American Development Bank1

The IDB’s Country Strategy with Brazil was approved on May 9, 2012. This was established for the period 2012–14 and is comprised of six strategic objectives: (1) stimulate social and productive inclusion; (2) improve the condition of the country’s infrastructure; (3) promote the development of sustainable cities; (4) improve the institutional capacity of public entities; (5) increase the sustainable management of natural resources and climate change mitigation and adaptation actions; and (6) promote development through the private sector. A new Country Strategy with Brazil for the period 2015–18 is under preparation, and it is expected to be approved in the second semester of the current year.

For 2015, the total loan approvals are projected to reach US$1,856.0 million. Loans with sovereign guarantee make the bulk of the operations, amounting to US$1,609.0 million, while operations with the private sector are expected to total US$247 million.2 In addition, the IDB program in the period estimates approvals of US$4.8 million in grants for Technical Cooperation.

In 2014, the IDB approved 30 loans amounting to US$2,947.8 million, including 21 sovereign guarantee operations for US$2,240.8 million. Half of the lending went to support productivity and infrastructure (50 percent), stimulate social and productive inclusion (22 percent) and institutional strengthening and modernization of the state (20 percent) and lending to subnational governments corresponded to 71 percent of total lending to Brazil. Among the major operations approved, some highlights are: (a) São Paulo State Road Investment Program Phase II (US$480.1 million), (b) Strengthening the Unified Health System in Salvador (US$200 million), (c) Road Program for Logistic and Integration Ceará Phase IV (US$200 million), and (d) Program of Environmental Sanitation of CAESB3 (US$170.8 million).

Brazil: Loans Approved by the Interamerican Development Bank in 2014

(In million USD) 1/

Subnational Gov.Central Gov.Private sectorTotal
Stimulate social and productive inclusion482482
Improve the condition of the country’s infrastructure1, 1041, 104
Promote the development of sustainable cities171171
Improve the institutional capacity of public entities285150435
Increase the sustainable management of natural resource
Promote development through the private sector48707755
Total value of loans2, 0911507072, 948
Total number of loans201930

Based on the IDB’s Strategy Areas for the period 2012-2014.

Based on the IDB’s Strategy Areas for the period 2012-2014.

Brazil is the largest IDB borrower. The current active portfolio consists of 123 loans to the public sector (US$11,382 million) and 8 loans to the private sector (US$734.5 million). Brazil’s outstanding debt with the IDB amounts to US$14,531 million (as of end of December 2014) and from the current portfolio US$8,932.7 million have not been disbursed yet (as of January 8, 2015).

Statistical Issues

(As of January 30, 2015)

I. Assessment of Data Adequacy for Surveillance
General: The quality of macroeconomic statistics has improved significantly, and data provision is adequate for surveillance.
National Accounts: The national accounts estimates are compiled based on the guidelines of the 1993 System of National Accounts. The availability of annual and quarterly supply and use tables also contribute to the development of consistent national accounts estimates. The series (data and supporting methodological notes) are available on the internet ( and in International Financial Statistics (IFS). The IBGE is in the process of changing the base year of the national accounts and implementing the System of National Accounts 2008. It is also participating in the G-20 Data Gaps Initiative regarding recommendation 15, which calls for developing a strategy to promote the compilation and dissemination of the balance sheet approach, flow of funds, and sectoral data on a quarterly and annual basis.
Price Statistics: Since July 1999, the official consumer price index has been the Broad Consumer Price Index (IPCA) compiled by the Brazilian Statistical Institute (IBGE). The IPCA covers changes in the prices of goods and services purchased by households earning between one and forty times the minimum wage in 11 metropolitan areas. Wholesale price indices are compiled only by the Getúlio Vargas Foundation (FGV). The export price data include total unit values of exports, and unit values and wholesale prices of coffee exports. The IBGE compiles a monthly producer price index of manufacturing activity with a December 2009 base.
Government Finance Statistics: The Ministry of Finance and the Brazilian Central Bank (BCB) compile and disseminate government finance statistics using the Government Finance Statistics Manual (GFSM) 2001 presentation. The reported statistics include the statement of government operations and financial balance sheet for the consolidated central government (comprising the National Treasury and Social Security) as well as financing operations and the financial balance sheet for the general government. The reported data are compiled by converting the nationally published data, which still broadly follow the GFSM 1986 framework. The data reflect the movements of the single treasury account and are on a cash basis except for interest. The gross debt indicator excludes government securities under the central bank’s outright ownership, making international comparisons difficult.

In 2009, the Brazilian authorities developed a migration plan for the full implementation the GFSM 2001. This plan comprises the introduction of a new accounting framework based on the International Public Sector Accounting Standards (IPSAS), which merges the traditional budgetary approach, the accrual based accounting, and some additional internal controls into a single system. This new accounting framework significantly enhances the usefulness of the Brazilian public sector accounting information, which will be a significant step towards the compilation of complete GFS in a systematic way, and is expected to be in place in 2015.
Monetary and Financial Statistics: The BCB compiles and publishes monetary and financial statistics, with concepts, definitions, and classification that are broadly in line with the Monetary and Financial Statistics Manual (MFSM) 2000. In close cooperation with STA, the BCB introduced the standardized report forms based on accounting data in March 2013. However, the institutional coverage of the other financial corporations needs to be expanded to include insurance corporations, open pension funds, capitalization funds, and exchange houses.

The BCB regularly reports quarterly FSIs to the IMF for publication. Currently, the BCB reports all core and 18 encouraged FSIs, with data beginning in Q1 2005. Plans are under way to compile the rest of the encouraged FSIs.
External Sector Statistics: Brazil disseminates quarterly data on the balance of payments and international investment position. External data are compiled according to the fifth edition of the Balance of Payments Manual. The BCB is supplementing the registry of the foreign exchange system with surveys on transportation, insurance, and other services. Compilation of reinvested earnings and undistributed branch profits item in the current account and reinvested earnings item in the financial account could be improved, as the registry of the foreign exchange system does not capture these transactions. The BCB publishes the data for monthly balance of payments and the Data Template on International Reserves and Foreign Currency Liquidity with a lag of one month. Brazil reports quarterly total external debt position data with a three-month lag to the World Bank’s Quarterly External Debt Statistics database. The authorities are in the process of revising external sector statistics in line with the sixth edition of the Balance of Payments and International Investment Position manual (BPM6). This movement is consistent with the adoption of the new methodology of the System of National Accounts (SNA 2008) in Brazil, due to be published by end March 2015. Revised BOP data are expected to be published in April 2015, with revised external debt data expected in June. As part of this conversion, at least two important revisions will be made: foreign holdings of domestic debt securities will be included in external debt statistics, and its income, up to now reflected jointly with principal outflows, will be recorded separately.
II. Data Standards and Quality
Subscriber to the Fund’s Special Data Dissemination Standard (SDDS) since 2001. Uses SDDS flexibility options on the timeliness of the general government operations and depository corporations survey.

Implementing G-20 DGI recommendations: The authorities have already implemented a good number of the recommendations and work is underway to implement the remaining ones. Further progress would focus on monetary and financial statistics, external position and flow statistics, real estate price indexes, general government statistics, and sectoral accounts.
No data ROSC is publicly available.
Brazil: Table of Common Indicators Required for Surveillance As of January 30, 2015
Date of Latest ObservationDate ReceivedFrequency of Data7Frequency of Reporting7Frequency of Publication7
Exchange Rates1/29/151/30/15DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities11/28/151/30/15DDD
Reserve/Base MoneyNov 141/30/15MMM
Broad MoneyNov 141/30/15MMM
Central Bank Balance SheetNov 141/30 /15MMM
Consolidated Balance Sheet of the Banking SystemNov 141/30/15MMM
Interest Rates21/30/151/30/15DDD
Consumer Price IndexDecember 141/09/15MMM
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4December 139/30/14MMM
Revenue, Expenditure, Balance and Composition of Financing3– Central GovernmentDecember 141/30/15MMM
Stocks of Central Government and Central Government-Guaranteed Debt5December 141/30/15MMM
External Current Account BalanceDec. 141/23/15MMM
Exports and Imports of Goods and ServicesDec. 141/5/15MMM
GDP/GNPQ3 201411/28/14QQQ
Gross External DebtDec 141/23/15MMM
International Investment Position6Q4 141/23/15QQQ

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Prepared by the World Bank.

Prepared by the Inter-American Development Bank.

Private sector values does not include loans by the Inter-American Investment Corporation (IIC) and with the Multilateral Investment Fund (MIF) operations, both members of the IDB Group.

Federal District Environmental Sanitation Company.

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