MercoPress. South Atlantic News Agency

Fiscal flexibility for infrastructure investments

Brazilian president Lula da Silva asked this Tuesday president George Bush for US support in implementing changes in the contingent agreements reached between Latinamerican countries and the IMF.

"The president requested that US representatives in the IMF support changes in the methodology for assessing contingent agreements between the IMF and Latinamerican countries", said Brazilian president spokesperson André Singer.

President Lula da Silva spoke with President Bush two days after having met IMF Executive Manager Horst Koehler who was specially invited to Brazil over the weekend.

Brazilian officials suggested to Mr. Koehler that infrastructure investment should not be included in the assessment system used by the IMF to measure fiscal discipline of countries that have contingent agreements with the multilateral financial organization.

Mr. André added that president Lula da Silva had already spoken about the issue with Spanish president Jose Aznar and is planning similar meetings with British, German and French government officials.

Apparently Mr. Lula da Silva also asked President Bush to take into account the "Argentine recovery which has been managing public policies seriously and responsibly".

Mr. Bush and Mr. Lula da Silva who have met personally five times in the last 14 months have developed a good personal rapport.

Mr. Lula's lobbying for Argentina follows a meeting with president Nestor Kirchner last week in Venezuela where they agreed to consider a possible common strategy before international multilateral organizations. Both presidents are scheduled to meet next week in Sao Paulo to continue talking about the initiative.

Last year Brazil renewed a 14,8 billion US dollars contingent agreement with the IMF and managed to recover investors trust but the Brazilian economy contracted 0,2%. Argentina on the other hand is experiencing a strong recovery since the melting of its economy in 2001/2002 (growing 8,5% in 2003), but the Kirchner administration has warned that it will not repay a 3 billion loan due next March 9 unless the IMF guaranties the continuation of the current 13,3 billion US dollars stand by agreement.