Press Release: Remarks by IMF First Deputy Managing Director Anne Krueger in Brazil
November 5, 2003
"The purpose of my visit to Brazil is to meet key members of President Luis Inacio Lula da Silva's administration as well as members of the business and financial community, as Brazil successfully nears the end of the Fund-supported program that has admirably stabilized its economic and financial situation and positioned the country for a strong recovery. In Brasilia, today, I have already had the pleasure of meeting with Vice President José Alencar, Finance Minister Antonio Palocci, the President's Chief of Staff Jose Dirceu, and Central Bank President Henrique Meirelles. Tomorrow, in São Paulo, I will be meeting representatives from the private sector.
"The IMF has been privileged to enjoy a close working relationship with Brazil. Over the past year, the Brazilian authorities have implemented prudent economic policies that have overachieved the fiscal targets and gained the support of the official and private international community, To consolidate the recent achievements, the authorities have indicated to me their desire to extend the current Stand-By Arrangement for about one year, with an augmentation of resources, as part of its strategy to exit from Fund support. The IMF team led by Mr. Jorge Márquez-Ruarte has worked with the authorities this past week toward this end. The process is at an advanced stage. The government has confirmed that it will maintain the sound policies that have been successfully implemented this year. In addition, the government intends to continue its program of structural reforms in areas crucial to help accelerate growth over the medium term. Key measures will enhance financial intermediation, lower the bank lending spreads, and improve the business environment. Fiscal overperformance is allowing the government to strengthen its support of the water and sanitation sector at the subnational level and enhance its institutional framework. Toward this end, the authorities will identify revenue-yielding projects of a self financing nature that will strengthen subnational governments and contribute to the welfare of the low-income population.
"In my judgment, the authorities are putting together a sound program. On this basis, IMF management expects shortly to recommend the program to the Executive Board. The proposed augmentation, combined with undrawn resources available under the program after the completion of the current review in December, would make a total of about US$14 billion available to Brazil during 2004. Given the strong recovery in market confidence, the government has expressed its intention not to draw these additional amounts. 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. Moreover, in order to smooth Brazil's repurchases to the Fund, the authorities have requested to extend by one year repurchases of SDR 4 billion (about US$5.5 billion) arising in 2005 and 2006.
"As the President and his administration celebrate the first anniversary of their election, we at the Fund would like to extend our congratulations for their first year in office. The implementation of the government's agenda has already done much to reduce Brazil's vulnerabilities. The government's program for 2004 will continue this process, and bring economic progress to all classes of Brazilian society. Over the coming year, we look forward to continuing to work with Brazil to ensure the achievement of these objectives," Ms. Krueger stated.