News Brief: IMF Completes Third Review of Stand-By Arrangement with Brazil
Brazil and the IMF
Country's Policy Intentions Documents
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Brazil—Letter of Intent
Dear Mr. Köhler:
Following our letter of June 5, 2002 and the attached Memorandum of Economic Policies (MEP) and Technical Memorandum Understanding for the Third Review of Brazil's Stand-By Arrangement, we are writing to inform you that the government has decided to strengthen its economic program for 2002 in order to address the recent turbulence in financial markets regarding Brazil. For this purpose, the primary surplus target for the consolidated public sector is being raised from 3.5 percent of GDP to 3.75 percent of GDP in 2002.
In addition, the government plans to carry out a debt buyback of external sovereign bonds falling due in 2003 and 2004 for an amount equivalent up to about US$3 billion. Brazil intends to draw from the IMF the resources that will be available after the completion of the Third Review, and we would like to request that the performance criterion on the net international reserve floor be reduced from the current US$20 billion to US$15 billion for the remainder of the arrangement. This would facilitate the buy back of sovereign external debt.
We look forward to maintaining the usual close and constructive policy dialogue with the Fund on macroeconomic policies in line with the previous understandings.