*The executive board of the International Monetary Fund (IMF) has released the findings from its latest Article IV Consultation with Brazil, which concluded on 14 July. It welcomed Brazil’s strong growth performance and the falling rates of unemployment and poverty in recent years but also encouraged authorities to work towards keeping inflation on target and secure fiscal sustainability. The IMF expects growth to moderate to 2.3% in 2025, down from 3.4% in 2024. In its latest assessment, the board recommended “an enhanced fiscal framework with a strong medium-term anchor” as well as “measures to mobilise revenues, including rationalising inefficient tax expenditures and tackling budget rigidities”. The board also called on authorities to “continue to gradually phase out the financial transaction tax”, referring to the IOF tax which is levied on certain types of financial operations such as currency exchange and is used as a lever to regulate capital flows. The IMF’s calls for the phasing out of the financial transaction tax comes amid the government’s efforts to increase IOF tax rates to boost its revenue. In June congress passed a bill to suspend the government’s tax hikes but on 16 July supreme court (STF) justice Alexandre de Moraes provided a boost to the government by restoring most of the tax increases.
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