MercoPress. South Atlantic News Agency

IMF praises Brazil but unemployment remains strong

The International Monetary Fund, IMF, praised Brazil this week for its achievements, “exceeding the most optimistic expectations” of the multilateral organization. However Brazil has not yet hinted whether it will renew a 30,4 billion US dollars stand-by credit line agreed in September 2002.

"The current program is evolving very well, and even for naturally optimists such as myself have exceed all expectations, and I believe anticipates good things for the coming future", said Tom Dawson, IMF spokesperson. However the unemployment rate remains strongly high at 12,9% last September in spite of a modest slide from 13% in August.

The average Brazilian worker's salary also continues to erode for the ninth month running and now stands at the equivalent of 240 US dollars, 2,4% less than in August and 14,3% below September 2002, according to the Brazilian Statistics and Geography Institute, IBGE. The number of Brazilians employed increased 1,2%, but so has the number of people looking for jobs. In September 2002, unemployment was 11,5%.

The Brazilian economy actually fell into recession during the second quarter of 2003 pushed by exhorbitant interest rates that took all steam out of the economy in an attempt to eradicate inflation.

However since last June the administration of President Luiz Inacio Lula da Silva began slashing the basic reference rate helping to ease the credit crunch and this week the Brazilian Central Bank cut the basic rate for the fifth consecutive month, which now stands at 19%. The coming week an IMF delegation is expected in Brazil for the fifth review of the current program agreed when the stand-by credit was granted over a year ago.

Mr. Dawson said that once the current IMF agreement concludes in December, Brazil must decide on the type of relation it pretends with the multilateral organization, and if it wishes to extend or cancel the current credit arrangement.

President Lula da Silva took office last January promising a strong economy and the creation of millions of jobs.