MercoPress. South Atlantic News Agency

Lula seeks new agreement with IMF

Brazil announced it will seek a new agreement with the IMF to replace the current one that expires in December, and revealed that First Managing Director Anne Krueger will be arriving this Wednesday to begin negotiations.

"Our joint assessment (with the IMF) was that yes, we are interested in continuing (the current program) or a new one. This will help Brazil keep growing", said Joaquim Levy from the Treasury Department of the Brazilian Finance Ministry.

The announcement was made after several meetings with the current head of the IMF mission in Brazil Jorge Marquez-Ruarte who is currently making the fifth and last review of the 30 billion US dollars stand-by agreement that expires next December.

Mr. Levy did not disclose the amount of the new agreement but said it would "best respond to balance of payments prospects and the international financial commitments of Brazil".

Ms. Krueger is coming to Brazil invited by Finance Minister Antonio Palocci and this would be the first time the left wing administration of President Luiz Inacio Lula da Silva sits to the table with the IMF to negotiate an agreement.

The announcement had an immediate positive impact in local markets.

In late October Brazilian officials talked about a "transition" program that would enable the country to complete a "friendly departure" course from the IMF after having complied more that successfully, with the targets of the current agreement.

The future IMF program was described as "an insurance policy" in the event of international financial turbulences with local impact.

The current IMF agreement was planned over a year ago to protect the Brazilian economy from investors' mistrust during the electoral campaign that turned Mr. Lula da Silva president.

Contrary to expectations the Lula da Silva administration implemented a most orthodox economic policy with deep budget cuts and high interest rates that kept inflation under control, reverting investors mistrust.