Picture Source: Trendfool Website
The Brazilian government has announced that they will be closing the IMF’s representative office in the country due to “inaccurate forecasts” regarding Brazil’s economic growth. The government will cease to recognise the IMF’s representative office in the country from June 30th 2022 onwards.
Paulo Guedes, Brazil’s finance minister commented, “It has been years since they were needed here. They stayed because they like Feijoada [ black bean and meat stew], football, good conversation, and from time to time, to criticise and make wrong predicaments”. Paulo Guedes has taken an aggressive stance against the IMF and their recent forecasts, particularly their forecast last year as the pandemic was raging throughout the country. The IMF estimated a 9% decrease in Brazil’s GDP (gross domestic product) in 2020 as a result of the pandemic, however the actual decrease according to government statistics was only about 4%. “If they want, they can keep their office, but we’re officially saying we don’t need to have them here anymore”, commented Paulo Guedes.
Paulo Guedes, a former fund manager from Rio de Janeiro, and his ministry have a different idea about the trajectory of the Brazilian economy. The finance minister believes that the country has entered “a V-shaped recovery” following the economic downturn caused by the Coronavirus pandemic last year, and he criticises anyone who argues otherwise. His ministry has estimated that the GDP will grow more than 5% this year and 2% next year. However, other economists are sceptical about the ministry’s figures as they were forecasting stagnation or even recession for Brazil in 2022. The country has already entered a recession in the third quarter of this year due to a surge in inflation.
- Paulo Guedes ( Brazilian finance minister ) Picture Source: Bloomberg Website
The IMF had an office in Brazil as it is the largest Latin American economy and it helped them understand the situation in the region better, but they have agreed to close the office by the 30th of June next year as requested by the Brazilian government.
However, it is difficult to comprehend that an entire IMF branch was closed due to clashes in forecasting data. Charles Robertson, chief economist at Renaissance Capital, commented “The IMF is concerned about the scale of Brazil’s fiscal deficit and its rising debt levels and that’s not what [President Jair] Bolsonaro wants to hear… It could be that the IMF is being quite good at doing what it does, which is dig into the details on the fiscal side, and the government would rather that didn’t happen before [next year’s] election”.
December 23rd 2021 | 7:30 PM