Brasília, 6/21/2004 (Agência Brasil) - On Friday the International Monetary Fund approved the seventh revision of its latest agreement with Brazil. The approval, which is valid until December, permits Brazil to withdraw US$1.3 billion, but Brasilia says it does not intend to withdraw the money.

Brazil's minister of Finance, Antonio Palocci, in a letter of intentions to the IMF board of directors, explained Brasilia's intention to continue to treat the agreement as a preventive measure and not withdraw the money the country now has a right to. "We continue to see this as a precautionary program. However, as always, we will be talking with the IMF, willing to adopt additional measures if necessary to make the program a success," said the minister.

Palocci said he remains convinced that growth this year will reach 3.5%, with inflation around the 5.5% government target. He pointed out that sales were rising, and consumer and business sector confidence were up. "With a boost from strong performance in the export sector, we expect to run a current account surplus this year," wrote the minister in his letter of intentions.

The minister went on to say that the government remains committed to achieving a 4.5% of GDP primary surplus for the period between 2005 and 2007, and reducing public debt.

"Our reform agenda for this year is broader than in 2003. We are moving ahead on various fronts, strengthening the perspectives for growth in the medium term," concluded the minister in his letter.

In a note on the approval, the second managing director of the IMF, Anne Krueger, praised Brazil's macroeconomic performance and said the country is on the way to an economic recovery. Krueger also praised the Central Bank's cautious approach in keeping interest rates steady and recommended continued structural reforms and poverty combat programs.

(Translator: Allen Bennett)