Journal Issue

Brazil: Staff Report for the 2016 Article IV Consultation—Informational Annex

International Monetary Fund. Western Hemisphere Dept.
Published Date:
November 2016
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Fund Relations

(As of September 16, 2016)

Membership Status: Joined January 14, 1946; Article VIII

General Resources Account:

SDR MillionPercent Quota
Fund holdings of currency (Exchange Rate)10,116.8492.07
Reserve Tranche Position875.178.71
Lending to the Fund
New Arrangement to Borrow783.12

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)
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.

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 March 16, 2015. 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). FAD support to a Fiscal Transparency Evaluation organized by the Inter-American Development Bank. There were two visits: one to explain the methodology and the second when we delivered the assessment itself. FAD has also provided TA to São Paulo on the implementation of a public service cost system. During the last year FAD helped preparing a cost manual, defining the reforms in the IFMIS system to calculate costs automatically, and defining procedures to calculate costs of the secretaries of penitentiary administration, health, and education.

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 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.

The World Bank has initiated the preparation of its new Country partnership Framework. The new CPF is being built on, and deepened, the last FY 2012‒15 Country Strategy, which had as a main objective to make a catalytic contribution to Brazil’s efforts to eradicate poverty and to become a more prosperous and inclusive country by focusing on four strategic objectives: (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.

As part of the preparation of the new country strategy the World Bank recently completed a Systematic Country Diagnostics. The SCD identifies five main challenges facing Brazil: (i) lack of fiscal space and a large transfer of resources to the non-poor (particularly pensions); (ii) weaknesses of public sector governance and institutional fragmentation which hamper effective long-term policy design, planning and implementation; (iii) segmentation of financial markets, lack of long term credit and high interest rates; (iv) insufficient competition and poor business environment; and (v) weaknesses in the management of Brazil’s natural resources and insufficient resilience against climate risks.

IBRD lending program was US$550 million for FY 15, and US$758 million for FY 16. The strategy for the FY 17 is to start rebuilding the lending pipeline for FY 18, while FY 17 new lending deliveries should be close to US$300 million. The Brazil program continues to maintain a complex portfolio bringing together financial, knowledge, and convening services and sharing our work globally. 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. 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’s investment portfolio in Brazil now stands at US$4.05 billion, including US$1.3 billion from syndications. IFC new commitments reached US$1.3 billion by the end of FY 16, making it the Corporation’s largest country program for FY 16. Out of the US$1.3 billion in new commitments, US$1.018 million are from IFC’s own account and US$309.38 million from mobilization. Key sectors include Financial Markets, Health, Education, Agribusiness and Infrastructure. Looking forward, IFC has taken a disciplined, selective approach to adapt to the current environment, focusing on protecting portfolio companies, supporting the relief of distressed assets and keeping markets open for expansion and investment. The long-term strategy aims to continue supporting the country to address the challenges of financial inclusion, urbanization, competitiveness and sustainable management of natural resources through investments focused on the infrastructure, telecom, health, education, agribusiness and financial institutions sectors. In addition to its investment projects, IFC has provided Brazil’s fast-growing private sector with various advisory services, including for PPP projects (roads, health, education), through a partnership with BNDES, the Brazilian development bank.

MIGA processed in FY 15 its first exposure transaction in Brazil since FY 09. While MIGA has had no exposure in 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 and by the Brazilian Senate on September 2, 2014, mobilized 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-IMF Country Level Work Program under JMAP
Provisional Timing of MissionsExpected Approval/Delivery Date
A. Investment Project Financing
1. Recife Municipal PforR06/30/2017
2. Salvador PForRTBD
B. Program for Results
1. Fortaleza Municipal IPF02/15/2017
C. Advisory Services and Analytics
Technical Assitance (TA)
1. Energy effic. recommendations for CESAN08/22/16
2. Infrastructure Regulatory Frameworks09/30/16
3. BR Online retail and urban logististics09/30/16
4. Rio de Janeiro Education Studies10/28/16
5. BR Transport and Gender Mainstreaming10/31/16
6. Innovation in DRM Decision Making in BR11/28/16
7. Agriculture Drought Preparedness ENSO12/12/16
8. Post-COP21 Environmental Research Agenda12/30/16
9. Conferences, workshops and other events05/10/17
10. On Efficiency of Pub. Inv. for Productiv.05/31/17
11. Studies on Innovation Impacts and Policies05/31/17
12. Studies on Invest. and Trade Facilitation05/31/17
13. Logistics Support to SEP/PR, SECEX, SEAE05/31/17
14. Comp Advoc Support SEAE, SMPE, MPOG, MOC05/31/17
15. Cross Policy Synergies05/31/17
16. BR NLTA DEFRA CERRADO Climate Change06/08/17
17. Participat. Governance Citizen Security06/30/17
18. Review of Costs of Violence06/30/17
19. Municipal Diagnostics of C&V06/30/17
20. Briefs to Inform City Strategies06/30/17
21. Assessment of the Bank’s engagement06/30/17
22. Capacity building based on interventions06/30/17
Economic Sector Work (ESW)
1. BR financial sector credit allocation08/25/16
2. Infrastructure Efficiency for Growth09/30/16
3. Brazil Governance in Infrastructure09/30/16
4. Mobility in Cities Study09/30/16
5. BR Subnational Governance Monitoring10/31/16
6. Expenditure Review of Education12/16/16
7. Analysis of INDC Land Use Targets01/31/17
8. Knowledge Products on Social Assistance05/08/17
9. Exploring Forest Bonds05/31/17
10. Typology of Cities05/31/17
11. Brazil expenditure review06/30/17
Programmatic Approach (PA)
1. BR WWP Learning Initiative (SoD Hub)05/25/17
2. Productivity for Shared Prosperity05/31/17
3. Violence Prevention in Brazil06/30/17

Relations with the Inter-American Development Bank1

The IDB’s Country Strategy with Brazil was recently approved on March 30, 2016. This was established for the period 2016-18 and is comprised of three strategic areas: (1) increase productivity and competitiveness; (2) reduce inequity and improve public services; (3) strengthen institutions at the three levels of government; as well as the crosscutting issues of gender, diversity, integration, and climate change.

The portfolio of loans approved during the strategy 2012‒14 period totaled 84 operations for US$8.35 billion, 68 of which were sovereign guarantee (SG) for US$7.4 billion, and 16 of which were non-sovereign guarantee (NSG) for US$950.7 million. Of the SG operations, 62 were with Brazilian states, state-owned enterprises, or municipals, thereby maintaining a subnational emphasis (91 percent of approved operations). In terms of the regional focus, 45 percent of SG operations (by number) are in the North (19 percent) and Northeast (26 percent). With regard to technical support, the IDB is the largest provider of technical assistance and knowledge transfer to public institutions. During the strategy period, 45 technical-cooperation operations were approved for a total of US$40.9 million, focusing on social and productive inclusion, and environmental and rural management and climate change.

In 2015, the IDB approved seven loans amounting to US$382.5 million, including one sovereign guarantee operation for US$56 million and six non-sovereign guarantee operations for US$326.5 million. The majority of the lending went to promote development through the private sector (85 percent), and promote the development of sustainable cities (15 percent). The lending to subnational governments corresponded to 15 percent of total lending to Brazil. Among the major operations approved, some highlights are: (a) Program for Integrated Urban Development of the Municipality of Campo Grande (US$56 million); (b) Banco Coorporativo Sicredi Financing for Rural Credit and Low Carbon Agriculture (US$50 million); (c) Mind Lab Increasing Access to Innovative Education Methodologies in Brazil (US$4.6 million); and (d) Itau Unibanco Women-Owned MSME Partnership (US$100 million).

Brazil: Loans Approved by the Interamerican Development Bank in 2015

(In millions of US$)1/

Subnational Gov.Central Gov.Private SectorTotal
Stimulate social and productive inclusion
Improve the condition of the country’s infrasctructure
Promote the development of sustainable cities5656
Improve the institutional capacity of public entities
Increase the sustainable management of natural resources
Promote development through the private sector326.5326.5
Total value of loans56326.5382.5
Total number of loans16.07

Based in the IDB’s Strategy Areas for the period 2012–14.

Based in the IDB’s Strategy Areas for the period 2012–14.

For 2016, the total loan approvals are projected to reach US$1,457.4 million. Loans with sovereign guarantee make the bulk of the operations, amounting to US$1,250.0 million, while operations with the private sector are expected to total US$207.4 million.2 In addition, the IDB program in the period estimates approvals of US$43.9 million in grants for Technical Cooperation.

Brazil is the largest IDB borrower. The current active portfolio consists of 118 loans to the public sector (US$11,315.8 million) and 50 loans to the private sector (US$974.2 million)3. Brazil’s outstanding debt with the IDB amounts to US$14,588 million (as of end of February 2016) and from the current portfolio US$7,253.2 million have not been disbursed yet (as of march 22, 2016).

Statistical Issues

(As of September 23, 2016)

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: Since 2015, the national accounts estimates follow the guidelines of the 2008 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). 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 price index reference for monetary policy 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 and two municipalities. Both the Getúlio Vargas Foundation (FGV) and the IBGE compile producer price indices, IPA and IPP respectively, since 2010.
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.
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 monthly data on the balance of payments and quarterly data on international investment position. External data are compiled according to the sixth 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 data on International Reserves and Foreign Currency Liquidity on a daily basis with a lag of one day. Brazil reports quarterly total external debt position data with a three-month lag to the World Bank’s Quarterly External Debt Statistics database.
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 October 6, 2016)
Date of Latest ObservationDate ReceivedFrequency of Data7Frequency of Reporting7Frequency of Publication7
Exchange Rates10/6/1610/6/16DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities110/5/1610/6/16DDD
Reserve/Base MoneyAug. 169/28/16MMM
Broad MoneyAug. 169/28/16MMM
Central Bank Balance SheetAug. 169/28/16MMM
Consolidated Balance Sheet of the Banking SystemAug. 169/28/16MMM
Interest Rates210/6/1610/6/16DDD
Consumer Price IndexAug. 169/9/16MMM
Revenue, Expenditure, Balance and Composition of
Financing3 – General Government4Aug. 169/30/16MMM
Revenue, Expenditure, Balance and Composition of Financing3 – Central GovernmentAug. 169/30/16MMM
Stocks of Central Government and Central Government-Guaranteed Debt5Aug. 169/30/16MMM
External Current Account BalanceAug. 169/26/16MMM
Exports and Imports of Goods and ServicesAug. 169/26/16MMM
GDP/GNPQ2 20168/31/16QQQ
Gross External DebtAug. 169/26/16MMM
International Investment Position6Q2 20168/23/16QQQ

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.

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.

Prepared by the World Bank.

Prepared by the Inter-American Development Bank.

Twenty-seven operations correspond to the Inter-American Investment Corporation (IIC) (US$945 million) and 23 operations to the Multilateral Investment Fund (MIF) (US$28.95 million), both members of the IDB Group.

Private sector values do include loans by the Inter-American Investment Corporation (IIC) and with the Multilateral Investment Fund (MIF) operations, both members of the IDB Group.

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