MercoPress. South Atlantic News Agency

Brazil prepared to support IMF with 10 billion USD

Brazil is prepared to support the International Monetary Fund, IMF, with ten billion US dollars, --5% of its international reserves--, with the purpose of boosting its position in the multilateral financial organizations, --votes and veto power--, in the framework of what was decided last week at the G20 summit in London.

Brazilian government sources quoted in the Sunday editions of O Globo said the decision would strengthen Brazil’s international political standing.

Last week the G-20 summit announced it would increase the IMF lending capacity from the current 250 billion US dollars to 750 billion.

Brazilian president Lula da Silva was quoted at the end of the G20 in London saying it would “very chic” for Brazil to become a creditor of the IMF after decades of having combated the organization’s policies as a radical union leader and later as a politician.

Brazilian Central Bank president Henrique Meirelles said the issue was still under “technical discussion”, but emphasized that the “important thing is that Brazil has the resources, sufficient international reserves for such an operation”.

Brazil international reserves stand at 202 billion US dollars.

The latest agreement Brazil signed with the IMF was in 2002 under President Fernando Henrique Cardoso, following Lula da Silva’s victory and fearing the fiery president elect would adopt radical positions.

However by 2005 President Lula da Silva paid its pending debt with the IMF, 30 billion US dollars and decided not to renew the agreement which gave it access to a stand by credit of 14 billion US dollars.

“Brazil currently has a privileged position because it does not need the IMF and with the contribution to the Fund it can increase its international political stature. But we have to be careful that it is the adequate contribution, we can’t start playing as rich kids”, said former Central Bank president Gustavo Loyola.

Currently Brazil’s participation in the IMF is 0.3% equivalent to 4.5 billion US dollars.

The Brazilian press over the weekend underlined US President Obama words when he addressed Lula da Silva as “this is my man; the most popular politician in the world”.

Folha de Sao Paulo said that the open support from President Obama doesn’t automatically make Brazil a world power but it certainly raised the country to another level of consideration in the global scenario.

“Brazil is not a street dog, nor is it a rottweiler”, underlined Folha de Sao Paulo.

The Brazilian press also points out that China only committed 2% of its international reserves in support of the IMF capital expansion.