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Brazil requests loan extension

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
November 2003
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On November 5, the IMF and Brazil provisionally agreed on a one-year extension of Brazil’s current loan. The proposed $14 billion accord, which still requires Executive Board approval, consists of $6 billion in fresh funds as well as the $8 billion available under the current arrangement, which would otherwise expire in December. In addition, the Brazilian authorities requested that repayments of about $5.5 billion arising in 2005 and 2006 be delayed by one year.

IMF First Deputy Managing Director Anne Krueger told the press shortly after a meeting with Brazilian Finance Minister Antonio Palocci that the program is part of a strategy to exit from IMF support. “In my judgment, the authorities are putting together a sound program,” she said. Given the strong recovery in market confidence, the government intends to treat these new funds as precautionary. “The funds will, however, be available to provide important insurance against possible external shocks, as the government completes the process of fully restoring market confidence and consolidating the foundations for sustained, equitable growth,” Krueger said.

Krueger welcomed the government’s commitment to maintaining the sound policies that it had successfully implemented this year. “The government intends,” she said, “to continue its program of structural reforms in areas crucial to help accelerate growth over the medium term.” Key elements of the new program will enhance financial intermediation, lower bank lending spreads, and improve the business environment.

“As the president and his administration celebrate the first anniversary of their election, we at the IMF would like to extend our congratulations,” Krueger said. The implementation of the government’s agenda, she noted, has already done much to reduce Brazil’s vulnerabilities.

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