IMF / Brazil, Inflation, and Lebanon
The IMF has agreed with the Brazilian authorities to close the IMF Representation Office in Brasilia by June 30, 2022, when the term of the current IMF Representative expires a Fund spokesman announced in a press briefing Thursday (December 16) in Washington, D.C.
“The IMF agreed with the Brazilian authorities to close the IMF representative's office in Brasilia by June 30, 2022, which is what you were saying, and that's when the term of the current IMF representative expires. So, like with many other member countries, the office in Brazil was opened during the time when we had a significant financial arrangement with Brazil. That was its initial purpose. And while that IMF arrangement with Brazil finished, the office was kept open to facilitate dialog between Fund staff and the authorities. This has happened, this has been the case, also with a number of other countries,” said Gerry Rice, Director of the Communications Department at the IMF.
After hawkish signaling from the US Federal Reserve and a rate hike by the Bank of England, Rice added that the Fund expects inflation to move down in the course of 2022. Nonetheless, inflation risks are to the upside and will require vigilance since continued high levels of US inflation may necessitate a more frontloaded policy response which would pose a systemic downside for both the US and global economy.
“The Federal Reserve has announced a well calibrated, proportionate response to rising wage and price pressures by accelerating the reduction in its asset purchases and signaling a more front-loaded path for the federal funds rate. Continuing to set policy in such a data dependent way will help keep inflation expectations anchored. However, this faster pace of Fed normalization does increase the risks faced by countries reliant on dollar funding, especially emerging and developing economies,” said Rice.
On Lebanon, Rice announced that a delegation from the IMF visited the country last week to continue the discussions with the Lebanese authorities on the reforms that are needed to address Lebanon’s deep economic challenges.
The visit gave the IMF team an opportunity to learn about the authorities’ views on reforms ahead and status of their technical work, Rice noted.
“I’d say there's been considerable progress in identifying financial sector losses, and work will continue in the coming period, including with support from the audits conducted by international auditing firms. We are now assessing the government's announced figures and we'll continue our discussions with the authorities in the context of the engagement I just described. Any strategy for dealing with these losses needs to come together, of course, with the implementation of comprehensive reforms to restore confidence, strengthen incentives for investment, enhance governance and transparency, all critical to boost employment, sustainable growth and reduce poverty over the years ahead. So those discussions are ongoing,” said Rice.
IMF staff intend to visit Beirut in early 2022 to continue these discussions, he added.
To watch the full press briefing, click here.