Goiânia, 10/30/2003 (Agência Brasil - ABr) - If the International Monetary Fund mission which is now in Brazil gives its stamp of approval, Brazil will be able to withdraw the last US$8 billion tranche from the September 2002 US$30 billion IMF loan. However, according to the president of the Central Bank, Henrique Meirelles, it is still not certain Brazil will do so.

According to Meirelles, "For the first time in ten years the country will have a surplus in its foreign accounts. The foreign account situation is very comfortable and reserves are growing, as well." As a result, there is no urgent need for a new IMF agreement, he says.

Meirelles also explained that the outlook for the domestic economy is bright. "There are signs of renewed economic activity as we move closer to the end of the year," he said, adding that a more flexible monetary policy, put into place back in July, along with lower interest rates, had caused a progressive rise in consumption. There was also more credit available, with real wages stronger due to lower inflation.

But Meirelles threw cold water on the idea of further sharp reductions in interest rates in the near future. He said that with the country's key interest rate at 19% [down from 26%], the foundation had been laid for sustainable growth and renewed economic activity. The head of the Central Bank pointed out that the interest rate that had the strongest effect on economic activity was the medium-term rate, "for 90, 180 or 360 days," and that rate, he said, "was heading downward, in line with government expectations."

In conclusion, Meirelles said the country's difficulties at the moment were due to the necessary adjustments made to control inflation and bring current accounts into line. "Brazil is paying the price of those adjustments. But it is precisely the success of those adjustments that made the cost less for the country," he declared. (AB)