Brazil: time to call in the IMF?

Given that Brazil’s growing debt burden is denominated overwhelmingly in local currency there is little need for the foreign currency financing that an IMF bailout would provide. Instead, the main benefit of calling in the IMF would be to add much-needed credibility to policymaking and therefore lower risk premia and interest rates on debt. The problem is that this would be a politically toxic decision – which, for now, makes any such move unlikely.