This paper presents a modifed version of the integrated macroeco nomic model for poverty analysis (IMMPA) for Brazil. In addition to keeping some of the characteristics of the basic framework (such as labor market segmentation, disaggregated public expenditure, and credit market imperfections), it introduces bond financing of the bud- get deficit, unskilled urban unemployment, and a flexible exchange rate. The properties of the model are illustrated by assessing the impact of a rise in offical interest rates on output, wages, unmployment, and poverty.