Press Release No. 06/07

Press Release No. 06/07

Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF), issued the following statement today in Brasilia:

"It is a great pleasure for me to visit Brazil once again, this time to mark the occasion of Brazil's early repayment of its financial obligations to the Fund. I was privileged to meet today President Luíz Inácio Lula da Silva. I also had the opportunity to meet Minister of Finance Antonio Palocci, Central Bank President Henrique Meirelles, and other senior officials. I particularly appreciated the President's hosting an event that brought together senior members of the government, members of Congress, and leaders of the business community, to mark Brazil's early repayment.

"Since my last visit in September 2004, the Brazilian economy has continued to make remarkable progress. The government's firm adherence to prudent macroeconomic policies has laid the basis for a sustained recovery in growth and employment, a steady reduction in inflation, and good progress in reducing poverty and inequality. Brazil has also seized the opportunity provided by favorable global conditions to expand trade, boost international reserves, and lower its external debt, thus consolidating market confidence in the economy. It is against this favorable background that, last month, the government repaid its outstanding financial obligations to the Fund amounting to SDR 10.79 billion (about US$15.5 billion), and announced plans to settle early this year its obligations to the Paris Club. We very much welcome these decisions, which reaffirm the growing strengthening of Brazil's economic and financial position.

"My discussions with President Lula focused on the challenges that lie ahead for Brazil. I share the President's view that the prospects for continued economic growth and poverty alleviation are now better than they have been for many years. We agreed that maintaining sound policies and moving further ahead with structural reforms would be essential to strengthen Brazil's resilience to adverse shocks, to realize its formidable growth potential, and to further improve living standards. President Lula and I also agreed that no effort should be spared in ensuring that the government's social programs, such as Bolsa Familia, that have been instrumental in reducing poverty in Brazil, continue to assist the least advantaged in benefiting from macroeconomic stability and growth.

"This visit to Brazil shows the close relations between Brazil and the IMF. Although Brazil is no longer a borrower from the IMF, the Fund will continue to play an important role as adviser, and exchange views with Brazil on global economic issues, where Brazil plays an important role. We in the Fund look forward to continuing to support the Brazilian government's commitment to economic progress and its reform efforts in whatever way we can."