MercoPress. South Atlantic News Agency

IMF and USA praise Brazilian economic policies

IMF Managing Director Rodrigo de Rato said in Washington he fully approves Brazil decision not to sign a new stand by agreement and anticipated that the relation between President Lula da Silva's administration and the IMF will remain very close.

"Given the current solid macroeconomic and institutional framework, the commitment of the Brazilian government to keep advancing with reforms and a much stronger than anticipated balance of payments situation, Brazilian authorities have decided not to request IMF support for a new agreement. The staff and management of the IMF totally support the authorities decision", indicated Mr. Rato.

The fact that no new program will be signed does not mean we will interrupt the mutually beneficial relation between Brasilia and the IMF, but rather "a new chapter begins in which the multilateral organization will continue monitoring the evolution of the Brazilian economy and of its economic policies".

"The Brazilian authorities and the IMF staff and management wish to continue with an economic policies dialogue that proves close and with cooperation spirit, through normal checking channels and post-program monitoring", said Mr. Rato.

In this way IMF also joined the wave of praise coming from Washington, both form international and regional financial organizations and the US government regarding the economic policy enforced by President Lula da Silva administration.

"Brazil's decision reflects the impressive results, overall well before expected, of macroeconomic stabilization and reform policies which have been supported all along the current agreement".

Mr. Rato further on talked about Brazil's economic activity recovery, expansion of private consumption, the return of investment, almost record trade and current account balances surpluses, inflation reduction and improved foreign debt structure.

"These efforts have significantly reduced economic vulnerabilities and increased confidence in the economy", underlined Mr. Rato.

IMF Managing Director pointed out the fact that Brazilian authorities are committed to continue with the reform agenda and with further steps to strengthen public finances by reforming the social security system.

On March 21, IMF concluded the tenth and last review of Brazil's performance under the current agreement which ended last week.

US Secretary of the Treasury John Snow also welcomed Brazil's decision of not signing a new agreement and said he was "impressed" and "delighted" with the economic policy of the Brazilian government.

However in spite of macro and overseas praise Brazilian industry and commerce catering to the domestic market complain bitterly about interest rates, (the basic Selic rates is now 19%), unemployment (10,6%) and the fact that inflation persists and the annual estimate, originally 5,1%, has been raised to 5,5% by the Brazilian Central Bank.