Increased cash reserves allow Brazil to pay off US$15.5 billion to IMF

15 December 2005

Brasilia, Brazil, 15 Dec – Brazil will pay off a debt of US$15.5 billion it owes to the International Monetary Fund and due in 2007 by the end of this year, due to increased cash reserves, officials said Wednesday.

The decision by the Finance Ministry and Brazilian Central Bank (BC) was approved by President Luiz Inácio Lula da Silva and the IMF has already been informed.

Since 2002 the IMF has granted loans to Brazil totaling US$24.65 billion.

According to the government, the payment will be made using cash reserves held by the BC, which at the beginning of this week were valued at US$67.062 billion.

Thanks to the Brazilian trade surplus, which this year is expected to total US$44 billion, the BC has been able to buy larger amount of US dollars on the international market, thus strengthening its reserves of US currency.

According to BC President Henrique Meirelles, “the pre-payment to the IMF is a historic moment,” for Brazil and “reflects the significant improvement of macroeconomic indicators in recent times, as a result of economic decisions taken by the government”.

The Ministry of Finance also announced that in 2005, for the second year running, the balance of payment surplus was expected to total around 2 percent of Gross Domestic product (GDP).

In July 2005 Brazil had already paid back some US$4.91 billion to the IMF.

The IMF is due to publish a report in the next few days about the discussion of the program for supporting the Brazilian economy.

At the end of 2004, Brazil’s foreign debt was valued at US$219.8 billion.(macauhub)