Brazil Does the Chic Thing and Lends the IMF US$ 10 Billion
The Brazilian government is prepared to support the International Monetary Fund, IMF, with US$ 10 billion - 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 international political standing. Last week the G-20 summit announced it would increase the IMF lending capacity from the current US$ 250 billion to US$ 750 billion. Brazilian president Luiz Inácio 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's victory and fearing the fiery president elect would adopt radical positions. However by 2005 President Lula paid its pending debt with the IMF, US$ 30 billion and decided not to renew the agreement which gave it access to a stand by credit of US$ 14 billion. "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 US$ 4.5 billion.
The Brazilian press over the weekend underlined US President Obama words when he addressed Lula as "this is my man; the most popular politician in the world." Folha de S. 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 S. Paulo. The Brazilian press also points out that China only committed 2% of its international reserves in support of the IMF capital expansion.
Mercopress - 06 Apr 2009