The International Monetary Fund on Friday said Brazil's economy is enjoying the best financial market conditions the country has seen in years, but urged authorities to keep inflation in check. The IMF said Brazil's prudent policies since the country's financial 2002 crisis spurred "a significant transformation of the economy," with notable improvements in income, employment, public debt and international reserve levels.
"Financial market conditions are currently the best in many years," the Washington-based lender said in an annual review of Brazil's economy, released days after it paid out a final $1.39 billion of a $42 billion loan deal with the country.
The IMF said while higher exports had led the recovery, domestic demand also rebounded significantly in 2004.
It praised Brazilian authorities for their "substantial achievement" in keeping inflation suppressed in 2004, but said the central bank should keep a close watch on the South American country's persistently high core inflation.
"The challenge for the central bank is to bring inflation down further while minimising the impact on growth," the fund said. "The recent appreciation of the real together with rising interest rates and the moderating pace of activity should contribute to slowing inflation in the coming months."
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