Brazil’s Guedes says IMF overlooked inflation surge, praises Brazil for ‘acting early’

BRASILIA (Reuters) – Brazilian Economy Minister Paulo Guedes criticized the International Monetary Fund for failing to spot surging inflation, saying it led to “misguided” advice, in contrast to early action in Brazil that he said has put the country ahead of the curve in controlling rising prices.

In a statement to the International Monetary and Financial Committee released by the IMF on Tuesday, Guedes cited a broadening in the IMF’s agenda in recent years to “incorporate non-core issues,” and said the fund needs to “concentrate on its traditional core mandate.”

“Unfortunately, IMF bilateral and multilateral surveillance have overlooked the nature, magnitude, and extension of the inflation surge that started during 2021. As a result, Fund policy advice was misguided in several instances,” Guedes said.

At the same time, Guedes praised the performance of the Brazilian economy, saying that the country is “positively surprising skeptics, including the IMF.”

The Economy Ministry forecasts GDP growth of 2.7% this year, while the IMF lifted its projection for Brazil to 2.8% on Tuesday, a 1.1 percentage point increase from the July estimate.

Brazilian policymakers have hiked rates by a total 1,175 basis points since March 2021, and inflation, which reached 7.17% in the 12 months through September, is expected to fall below 6% by the end of the year, said Guedes.

“Inflation has been consistently revised down and GDP growth revised up, in the opposite direction of most other countries, showing the benefit of acting early and resolutely with accurate evaluation and policies,” he said.

Right-wing incumbent President Jair Bolsonaro is seeking re-election in the Oct. 30 runoff but trails former leftist leader Luiz Inacio Lula da Silva in polls. Guedes lauded the government’s liberal agenda.

“The outcomes of our actions and resolve have started to be realized and, if maintained, will continue to steer the Brazilian economy’s performance for many years,” he said.

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