Brazilian President Dilma Rousseff responded to the International Monetary Fund concern over the country's fiscal situation, saying Brazil was fulfilling its responsibilities. IMF claimed that Brazil's competitiveness had eroded in recent months and downgraded the country's growth forecast from 4.25% to 3.5%.
Rousseff said Brazil had made progress in several fields in the past few months, since the government announced measures in response to spontaneous anti-government protests in June. One of the government's pledges at the time, she said, was to ensure fiscal responsibilities.
Finance Minister Guido Mantega also criticized the IMF report as incoherent and probably compiled by technical personnel not very familiar with Brazil's measures. Mantega said IMF chief economist Olivier Blanchard was much more in tune with the measures implemented in Brazil.
The IMF evaluation of Brazil's fiscal policies and debt management is mistaken and should be revised, Finance Minister Guido Mantega said.
Speaking to reporters on the sidelines of an event last week at the country's Senate, Mantega said the government took particular issue with the fund's recent analysis of the country's gross public debt.
I disagree with the methodology applied to Brazil, Mantega said. I hope the fund listens to the reasons explained by our technicians there and makes a change.
Officials from the Brazilian Finance Ministry were in Washington last week meeting with IMF authorities to discuss their differences. According to the minister, the country's gross public sector debt should be considered to total 58% of GDP rather than 68% as reported by IMF.
The minister said he hadn't fully read the latest IMF report, but had spoken to IMF managing Director Christine Lagarde regarding Brazil's questioning of its methodology. Mantega said in particular that the fund was in error in considering the weight of public debt securities held by the country's central bank.
Mantega said Brazil also took issue with the fund's recommendations on economic stimulus measures.
I get concerned when I read that the IMF questions the fiscal stimulus that we've given, he said. When the global financial crisis broke in 2009 the fund met with us at the G-20 meeting and said that to overcome the crisis we'd need to grant fiscal stimulus.
The minister, meanwhile, said the latest debt issuance by Brazil showed that investors maintained confidence in the country's policies. Brazil last week sold 3.2 billion dollars in sovereign debt overseas with a 2025 maturity as part of an effort to improve the country's yield curve. Mantega said the demand for the bonds was more than 10 billion.