The International Monetary Fund praised the performance and management of the Brazilian economy during the last few years and forecasted that the strong Brazilian currency, the real, offers more opportunities to open the economy both financially and commercially.
"We are proud of the performance of Brazil", said IMF Managing Director Rodrigo de Rato y Figaredo at the closing round of press conferences in Germany following the G8 summit.
Mr. Rato said 2002 is far distant and now "we can appreciate a dramatic change for good, in Brazil".
"One of the great efforts in Brazil's success has been the reduction of inflation with a very positive implementation of monetary and fiscal policies," added Rato.
The Brazilian economy expanded 3.7% in 2006 and is forecasted to finish 2007 with growth reaching 4%, while inflation will be dropping from 3.14% to 3% this year.
Specifically questioned about the strong appreciation of the Brazilian currency, which is causing concerns among manufactured goods and commodities exporters, Rato nevertheless described it as "good news."
"A strong currency renders great opportunities not only for lower interest rates but also for reforms which could give the Brazilian economy better chances of benefiting from a positive macroeconomic scenario," he said.
Rato rejected the idea that it's beneficial for the economy to have the Central Bank intervening in the exchange rate and underlined that the IMF believes "monetary policy must be focused on keeping inflation under control".
The Brazilian currency has appreciated over 10% so far this year, following on last year's 9% appreciation.
When President Lula da Silva took office in 2001, in the midst of fears about what economic policy he would follow, the US dollar was selling at almost 4 reais.
Over four years later and based on his sound orthodox policies the real has undergone a sustained appreciation and the exchange rate is 1.92 reais to the US dollar.