MercoPress. South Atlantic News Agency

Contingency loan for Brazil

The International Monetary Fund approved a 15 billion US dollars additional contingency loan for Brazil, following the satisfactory perfomance of the Brazilian economy, according to a release from the multilateral organization.

Brazil was granted a 5 billion US dollars loan by the IMF last September in the midst of the country's worst energy crisis and to anticipate any contagion from the deteriorating Argentine situation, the country's main Mercosur partner. However Brazil announced this week some minor adjustments to its economic plan anticipating a 4,4% inflation for 2002 instead of the original forecasted 3,7%. Similarly for 2003, consumer prices are expected to rise 2,8% instead of 2,2%. Regarding economic growth for 2002, the Brazilian Central Bank stands by its original 2,5% forecast in spite of the energy crisis aftermath, the Argentine situation, the Brazilian currency devaluation and the overall slower pace of the world economy. But local analysts question some of the official forecasts since presidential elections will be held next October, and the ruling coalition is split about candidates. Analysts believe the primary budget surplus target agreed by Brazil with the IMF is under pressure since strict fiscal discipline in an election year "is quiet a test", particularly when the government has to compensate for lower income tax revenue in the first quarter and higher public sector wages. On the bright side, Brazil recorded for the first time since 1995 an encouraging one billion US dollars surplus in its trade balance sheet.