News Brief No. 00/108

News Brief: IMF Completes Brazil Sixth Review

November 28, 2000

The Executive Board of the International Monetary Fund (IMF) completed the sixth review under the Stand-By credit for Brazil. As a result, Brazil will be able to draw, if needed, up to the equivalent of SDR 1,682.4 million (about US$2,135 million) from the IMF.

In commenting on the Executive Board's discussion of the review, Horst Köhler, Managing Director, made the following statement:

"During today's discussion, Executive Directors expressed broad satisfaction with the performance and prospects of the Brazilian economy. Real GDP growth is expected to average 4 percent this year, employment growth has been strong and has been accompanied by a decline of the unemployment rate, while consumer price inflation has remained subdued and broadly in line with the government's target.

"The Brazilian authorities are to be commended for their continued commitment to the policies supported by the Stand-By Arrangement with the Fund, including the achievement of a primary surplus for the consolidated public sector of  R$36.7 billion, equivalent to about 3.4 percent of the projected GDP for this year, and an appropriately cautious monetary policy, geared toward the announced inflation target.

"Further improvement of the external trade and current accounts and Brazil's growth prospects will be greatly facilitated by the maintenance of prudent fiscal and monetary policies, and further progress in structural reform.

"Progress has been made in various areas of structural reform, including the enactment of the Fiscal Responsibility Law and the social security system for private sector workers. The authorities are urged to deepen and accelerate efforts in other important, pending structural reform areas, including the social security system for public sector workers, the tax system, the financial system, and labor market legislation. The authorities should also move ahead with their remaining privatization agenda, and promote a further opening of the economy in a multilateral as well as regional context. Early progress in these areas is important for promoting productivity and efficiency in the economy, and enhancing its competitiveness and growth potential over the medium-term", Köhler said.