FIBA said Brazil's recent failure to send teams to youth and senior competitions, along with its inability to organise a 3x3 world tour event in Rio de Janeiro, have robbed players of their chance to compete internationally.
The Brazilian Basketball Confederation (CBB) have also allowed third parties to intervene in the selection and funding of national teams and it owes money to the world body, according to FIBA.
"The overall financial situation of CBB does not permit it to finance its operations or to be in good standing in its country," FIBA said in a statement, citing "serious institutional, sporting and financial difficulties."
FIBA said the CBB had also not responded to its calls to restructure the game in the South American nation.
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The Swiss-based organisation said it would re-evaluate the suspension at its next meeting on Jan. 28.
The CBB issued a statement declaring their "surprise" at the decision and promised to take action.
"The CBB is going to look at formal and legal means to preserve Brazilian basketball," the statement said, adding that officials would respond to FIBA's criticisms more fully on Wednesday.
(Editing by Frank Pingue)
