Brazil and IMF reach a US$14 billion agreement

05/11/2003 - 22h11

Brasilia - Brazil and the International Monetary Fund have reached a US$14 billion agreement which will run until 2007. According to minister of Finance, the deal is for Brazil to take the 5th and final tranche of the September 2002 agreement, worth US$8 billion, which could be withdrawn by the end of this year, and add it to an additional US$6 billion. "The idea is that we will not withdraw the funds. The agreement is just an insurance policy for us," explained the minister.

Palocci called the agreement a "preventive" measure, pointing out that it occurs against a background of improvements in the Brazilian economy and signs of renewed growth.

The president of the Central Bank, Henrique Meirelles, said there are plans to continue present macroeconomic policies until solid market confidence is obtained. "Fortunately, we are looking at a period of growth," added Palocci, explaining that the government intends to maintain inflation and expenditure targets, but allowing outlays to be made in sensitive areas, such as basic sanitation.

Under the new agreement, Brazil will have future payments of US$6.5 billion in 2005 (down from US$12 billion, in the old agreement), another US$8 billion in 2006, and US$8 billion in 2007, explained Palocci. (AB)