Aug 14 2026| Nº. 217

Editorial

On the eve of the formal start of the presidential campaign, two images of Brazil are circulating internationally. On the one hand, the International Monetary Fund highlights the “remarkable resilience” of the Brazilian economy, recognizing economic and social progress as well as reforms that have increased the country’s growth potential. On the other, governments and news organizations are watching with growing attention the diplomatic tensions, institutional conflicts, and a presidential election that has acquired an unusually strong international dimension.

The economic picture is particularly significant. The IMF projects 2.4% growth for 2026 and estimates Brazil’s medium-term potential growth at 2.5%, while also highlighting declines in unemployment, poverty, and inequality. The report also recognizes the positive effects of recent reforms, such as tax reform, as well as initiatives focused on ecological transformation and industrial policy. At the same time, it maintains important warnings regarding the trajectory of public debt, budget rigidity, and household indebtedness. The assessment, therefore, does not overlook vulnerabilities, but portrays an economy capable of withstanding an adverse international environment.

This external picture of the economy contrasts with political perceptions inside the country. The CNT/MDA poll released this week shows the government’s approval numbers virtually tied: 48.2% disapprove of the administration, while 47.3% approve. The contrast suggests that macroeconomic performance and advances recognized by international institutions do not automatically translate into a positive perception of the government.

The political picture is also complex. With only a few months remaining before the elections, Brazil is facing unusual levels of external pressure and diplomatic tension. Relations with the United States and Argentina are going through one of their most difficult periods in decades. Brazil’s political polarization has crossed national borders.

At the same time, clashes among branches of government and controversies involving Supreme Court decisions, press freedom, and electoral integrity have placed the limits and functioning of Brazil’s democratic institutions under international scrutiny.

Brazil as seen from abroad, as it approaches the start of the presidential campaign, is therefore a country that is economically resilient, politically strained, and internationally relevant. And perhaps it is precisely this combination that explains why the October election has ceased to matter only to Brazilians. The greater Brazil’s weight in the world, the greater the international consequences of the choices the country makes at the ballot box.

Highlights

• Voting Intentions. A CNT/MDA poll published this Tuesday, August 11, shows Lula with 42.4% of voting intentions and Flávio Bolsonaro with 28.7% in the first round. All other candidates are below 4%. In a runoff scenario, Lula holds 48% against Flávio’s 39.1%. Disapproval of the current government stands at 48.2%, while approval is at 47.3%.

• Interference. Celso Amorim, Lula’s special advisor for international affairs, spoke this Tuesday, August 11, to members of the Brazilian Chamber of Deputies' Foreign Relations and National Defense Committee. He described the United States' move to announce Daniel Perez as the nominee for the US embassy in Brasília as bizarre before Brazil had granted an agrément—the formal acceptance of the nomination. Amorim also expressed concern regarding the US decision to classify criminal organizations as international terrorist groups. In his view, such a decision cannot serve as a pretext for the United States to act independently of Brazil on security matters.

• International Friction. President Lula was the target this week of offensive and threatening posts and statements by political adversaries in other countries. Argentine President Javier Milei reposted a message calling Lula a "pig." Milei had previously referred to Lula as a "convict" when he visited São Paulo to show political support for Flávio Bolsonaro. The attacks prompted Brazil to recall its ambassador from Buenos Aires. On another front, Republican Congressman Carlos Gimenez of Florida published an AI-generated image showing Lula in place of Nicolás Maduro—blindfolded and handcuffed inside a US helicopter, holding a bottle of cachaça—with the caption: "What awaits him." Milei and Eduardo Bolsonaro shared the material.

• Protection of sources. The Federal Police lifted the confidentiality of a journalist from Maranhao named Luís Pablo. The action publicly exposed the name of an anonymous source who had collaborated with him on a report that raised suspicions of misconduct against Supreme Federal Court Justice Flávio Dino for using official vehicles for personal travel by him and his family members. The journalist's informant is a political adversary of Dino named Raimundo Curtim. The case's rapporteur, Justice Alexandre de Moraes, maintains that the information passed to Pablo by Curtim regarding the itineraries of Dino and his relatives exposes the Supreme Court Justice to the risk of attacks. Twenty-six firearms were found at Curtim's home. He is also implicated in cases involving the alleged cover-up of homicides in Maranhao. The breach of source confidentiality—a right guaranteed by the Constitution—sparked an intense debate regarding the limits of Moraes's actions.

• Bolsonaro's imprisonment. The Supreme Federal Court has barred Jair Bolsonaro's children from visiting their father, who is under house arrest in Brasília. Jair Bolsonaro was convicted for his involvement in the failed coup attempt against Lula in 2023. Due to health reasons, he was granted the privilege of serving his sentence at home, but he has since violated the terms of his house arrest. In the most serious incident, he even attempted to remove his electronic ankle monitor using a blowtorch. His children cite the judicial restrictions imposed on Jair Bolsonaro as evidence that their father is the victim of targeted political persecution, which helps mobilize and unify the far-right base during the election campaign.

• Environmental devastation. This week, the Supreme Federal Court began reviewing a new law that could weaken the requirements for granting environmental licenses in Brazil. This debate is essential for assessing impacts, mitigating risks, and preventing environmental damage caused by major public and private projects. The new law—passed by Congress in July and signed by Lula in August—weakens this protection. However, it violates key constitutional provisions. Consequently, political parties and civil society organizations have brought the case before the country's highest court. Review of the case began on Tuesday, July 12. 

News from the Alliance and partner organizations

 Freedom of the press. Transparency International criticized this week's decision by Supreme Federal Court Justice Alexandre de Moraes, which led to the disclosure of an anonymous source used by a journalist. In Brazil, the confidentiality of sources is a right guaranteed by the Constitution. For Transparency International, Moraes’s decision represents an attempt to “shield” Supreme Court justices and signals a worrying “authoritarian escalation” in Brazil. The case concerns a journalist who received information from an anonymous source about private trips allegedly taken by another Supreme Court justice, Flávio Dino, and his family members in the state of Maranhao using government vehicles. The allegations involve the suspected misuse of public resources, but Moraes holds that information exposing Dino’s security was published. It was discovered that the journalist’s source kept 26 firearms at home and is suspected of acting to cover up homicide cases in Maranhao.

Digital platforms. A group of Brazilian civil society organizations is preparing a reference document titled “The Role of Digital Platforms in Protecting Electoral Integrity: 2026 Edition.” The initiative is led by SAD, in partnership with InternetLab, the Marielle Franco Institute, FALA, and Data Privacy. Spanning nearly 40 pages, the document presents and analyzes the policies and practices adopted by social media platforms, messaging services, and artificial intelligence companies to combat disinformation campaigns and other practices and content that pose risks to public debate and electoral integrity.

Inequality in Brazil. A major report featuring over 40 indicators on inequality in Brazil was launched this Wednesday, August 12, at the Chamber of Deputies’ Main Hall in Brasília. The report was produced by the National Pact to Combat Inequality, which has been conducting this national survey since 2023 in partnership with the Inter-Union Department of Statistics and Socio-Economic Studies (Dieese) and independent sector experts. In addition to Brasília, São Paulo, Rio de Janeiro, and Belém (Pará) will host activities related to the report’s content throughout August—designated as the Month to Combat Inequality. Learn more.

Police violence. The Superior Court of Justice (STJ) has recognized the so-called “May Crimes” as “grave human rights violations.” These crimes, committed by state forces against a predominantly poor population, Black, and from the urban periphery, occurred during a wave of repression in May 2006. At the time, a criminal organization had ordered attacks against police officers and the general public in the state of São Paulo, triggering an excessive and illegal response from law enforcement. The Independent Mothers of May Movement and Conectas Human Rights participated in the legal proceedings, advocating for state accountability and the adoption of measures to prevent such events from happening again.

Gender and elections. The group Elas no Poder has launched a campaign titled “Truth Is Power” to combat gender-based political violence and disinformation during this October’s election campaign. The group points out that 51% of election-related offensive comments on YouTube are directed at women, even though they make up only 44% of all candidates. Learn more.

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Article

IMF Report Shows Brazil Has Reached a New Level

By André Roncaglia*

This article was originally published in the July 23, 2026, edition of the newspaper Folha de S.Paulo and was kindly provided by the author for reproduction in the Brazil Office Alliance newsletter.

Not so long ago, the release of International Monetary Fund (IMF) reports used to trigger considerable anxiety in Brazilian public discourse. Markets would react, and specialized media outlets would scrutinize every detail. Fears about the potential impact of IMF-imposed conditions in loan programs would mobilize social movements.

Fortunately, in 2005 Brazil turned a new page in its relationship with the IMF. That year, we paid off our debt early and became creditors to the Fund. Today, rather than imposing conditions that must be met, the IMF’s annual report offers a high-level external assessment of the Brazilian economy—one with which we are entirely free to agree or disagree.

The 2026 annual report has just been released. First, it confirms the "remarkable resilience of the Brazilian economy." The IMF projects growth of 2.4% in 2026, despite a challenging external environment. More importantly, medium-term potential growth is estimated at 2.5%, a figure substantially higher than market estimates. The report highlights the social achievements of recent years—such as the decline in unemployment, poverty, and inequality, as well as Brazil’s exit from the Hunger Map.

On the fiscal front, the report acknowledges the consolidation measures already underway—outlined in the Budgetary Guidelines Bill (PLDO) in April—and estimates that the debt trajectory should stabilize in the medium term. Even so, true to its fiscally conservative tradition, the IMF recommends that Brazil aim for a larger primary surplus and a slightly faster fiscal adjustment. While the ideal pace of fiscal consolidation may be a subject of debate, the IMF suggests measures strongly aligned with those Brazil is already taking: increasing tax progressivity, strengthening the transparency of parliamentary amendments, and eliminating regressive and inefficient tax expenditures. The Fund also highlights Brazil's budgetary rigidity, an issue that will have to be addressed sooner or later.

Recent success in controlling inflation—prior to the outbreak of the war in the Middle East—reinforces the recommendation that the Central Bank maintain its current monetary policy stance. This year, the IMF is releasing a separate assessment providing a detailed overview of the Brazilian financial system.

Despite significant progress since the last assessment in 2018, the Fund recommends allocating additional resources to the Central Bank to enable it to fulfill its functions in an increasingly complex monetary environment fraught with risks to stability. It also acknowledges that Pix has become a key catalyst for social inclusion. Nevertheless, the level of household indebtedness is a cause for concern and requires containment measures.

A significant contribution of the report to public policy debates in Brazil lies in its assessment of structural policies. This is an area where Brazil shines. According to the study, recent reforms have boosted the country's growth potential—notably the consumption tax reform, which was even recommended to Javier Milei’s Argentina in the IMF's most recent report on that country. Furthermore, Brazil has diversified its trading partners, increasing its integration with the rest of the world. The Ecological Transformation Plan and the Nova Indústria Brasil (New Industry Brazil) initiative are viewed positively. If combined with other reforms, these programs could help drive the necessary increase in our productivity.

In an international comparison, Brazil comes out looking good. As a member of the IMF Executive Board, I have the opportunity to closely follow discussions on similar reports for countries around the world. This privileged perspective gives me the conviction that Brazil is moving in the right direction. Despite historical and sociological specificities—manifested in an especially high cost of capital and a significant social debt owed to the poorest segments of society—in the current landscape, we share many macroeconomic challenges with economies of similar size, such as France, the United Kingdom, and Italy. As in other countries, the COVID-19 pandemic increased debt as a share of GDP (Gross Domestic Product) while productivity gains have remained low. Unlike other countries, however, we are managing to address these challenges within a context of sustained growth and social inclusion.

In 2026, the IMF reports no longer alarm Brazilians. We stand shoulder to shoulder with the Fund's major creditors. Whether one agrees or disagrees with the IMF's assessment, it is undeniable that Brazil has reached a new level. For those who persist in seeing the glass as half-empty, the only option left is to content themselves with being more pessimistic than the IMF.

*André Roncaglia is a professor at the University of Brasília and Brazil’s Executive Director at the IMF (International Monetary Fund).

External articles express the opinions of their authors and do not necessarily reflect the positions of Brazilian Alliance or the editors of the bulletin.