Brasília, May 10, 2004 (Agência Brasil) - On Friday (7), after his group's final meeting with the Minister of Finance, Antônio Palocci, the head of the International Monetary Fund (IMF) mission, Phil Gerson, said that he will recommend that the board of the multilateral agency approve the review of the IMF's nearly US$ 15 billion agreement with Brazil. The board is scheduled to meet to analyze the experts' report in mid-June, in Washington. If the review is approved, Brazil will be authorized to withdraw US$ 1.3 billion.
"Brazil fulfilled all the targets established in the agreement, and the government is following appropriate monetary and fiscal policies. It is advancing in an agenda of very important structural reforms to foment the country's growth," Gerson declared.
He added that "withdrawing [the funds] or not is up to the government. The government has this right, but, in our view, the Brazilian government doesn't intend to withdraw [the funds]," Gerson revealed.
The IMF experts arrived in Brazil last week to gather data on the Brazilian economy. This was the seventh review of the agreement, which was signed on August 29, 2002, in light of the political unrest in the country prior to that year's presidential elections.
In December, 2003, the agreement was renewed, this time on a standby basis. Since then it has been reviewed twice. Although it involves nearly US$ 15 billion, the Minister of Finance and President Luiz Inácio Lula da Silva have already proclaimed that the country does not intend to withdraw any of the portions authorized by the Fund.
The most important target stipulated in the agreement has to do with the primary surplus (revenues minus expenditures, excluding interest payments), set at 4.25% of the Gross Domestic Product (GDP).
In the first quarter, the Brazilian public sector (federal, state, and municipal governments and federal and regional public enterprises) managed to economize US$ 6.691 billion (R$ 20.5 billion) for a primary surplus of US$ 1.958 billion (R$ 6 billion), more than what was determined with the Fund.
The current agreement with the IMF has targets through the end of this year, and the final review will be in February, 2005. The next visit by Fund experts should occur at the end of July or the beginning of August.
According to Gerson, there are clear signs that the Brazilian econony began to grow this year and will continue to grow, especially in light of the progress in the agenda of structural reforms that are being implemented by Lula's Administration.
Gerson added that the pilot program to exclude investments from the computation of the primary surplus is in its initial stage. According to him, the theme will be analyzed better in Washington by experts from the Fund, the World Bank, and the Inter-American Development Bank. He also informed that it is possible that another mission will visit Brazil to deal with this matter.
Translator: David Silberstein
