Brasília, May 4, 2004 (Agência Brasil) - A mission from the International Monetary Fund (IMF) has been in Brazil since last week for the seventh review of the agreement signed on August 29, 2002, between the Brazilian government and the Fund. The agreement, which was renewed last December, is only a standby arrangement, and, even though it involves nearly US$ 15 billion, the Minister of Finance, Antônio Palocci, has already announced that Brazil does not intend to withdraw any of the portions made available by the Fund.

Yesterday (3), following a visit to the Economic Department of the Central Bank, where he went to gather data on the Brazilian economy, the head of the IMF's Atlantic Division, Phil Gerson, liked what he saw and judged that things in the country are going well in the economic area, because, in his view, Brazil has made important advances.

With respect to market oscillations influenced by the American economy, such as the elevation of the country risk premium to 701 points and a 1.67% rise in the value of the dollar, Gerson considered the situation normal and bets that the instability is temporary. He also said he is optimistic about the fulfillment of the primary surplus target established with Brazil for 2004.

During the visits, which were programmed when the agreement was signed, the experts gather figures on the the Brazilian economy and determine whether the targets set by the country and the Fund are being met. The most important target is the primary surplus (revenues minus expenditures, excluding interest payments), currently fixed at 4.25% of the Gross Domestic Product (GDP). Meeting this target means, in practice, that the country has been economizing resources to guarantee, at the very least, interest payments on its outstanding debts.

This obligation, however, has not constituted a problem for the economic team and the Brazilian government sector, which managed to save US$ 6.9 billion (R$ 20.5 billion) in the first quarter. The primary surplus came to US$ 2 billion (R$ 6 billion), more than the amount determined with the Fund.

From the perspective of the executive secretary of the Ministry of Finance, Bernard Appy, the second review of the agreement since its renovation last December should be quite smooth, since the government basically met all the targets. "The tendency is for the review to be untroubled, as has indeed been the case with all of the IMF's evaluations of Brazil," he affirmed.

The current agreement with the IMF has targets through the end of this year, with the final review scheduled for February, 2005. President Luiz Inácio Lula da Silva has already announced that the country does not plan to renew the agreement again with the multilateral organ. This does not, however, represent a break with the institution, of which Brazil is a member.

Translator: David Silberstein