Brazil Kisses the IMF Goodbye

 Brazil Kisses the IMF 
  Goodbye

Brazil’s secretary
of the Federal Treasury reaffirmed what the Finance
Minister had already announced: Brazil does not intend to renew
its agreement with the International Monetary Fund when that
accord expires at the end of the year. Brazilians don’t need
the IMF to know what fiscal responsibility is, says the secretary.
by: Gabriela
Guerreiro

Brazil does not intend to renew the agreement it signed with the International
Monetary Fund (IMF). The agreement expires at the end of this year. According
to the secretary of the Federal Treasury, Joaquim Levy, the Fund has been
an "excellent partner" for Brazil, but the government’s intention
is not to renew the agreement.

The secretary emphasized,
however, that the government will not make any decision that jeopardizes "the
progress achieved" by President Luiz Inácio Lula da Silva, especially
the fiscal adjustment.

On June 8, the Minister
of Finance, Antônio Palocci, also indicated that Brazil does not plan
to renew the agreement. "In principle, our agreement terminates between
the end of this year and the beginning of next," Palocci said.

Levy also asserted that
fiscal responsibility for the country is a prerogative of the Brazilian government,
not the IMF. "It is our commitment. We don’t need the Fund to know what
our fiscal responsibility is. Our external balance is more than adjusted.
We have to keep working," he emphasized.

At a public hearing before
the Joint Budgetary Commission of the National Congress, the secretary of
the Treasury demonstrated to the lawmakers that the government surpassed the
primary surplus target set for the first four months of the year by US$ 1.92
billion (6 billion reais), despite the deficit of US$ 322 million (1 billion
reais) turned in by public enterprises.

In the secretary’s assessment,
the government managed to exceed expectations, because it fulfilled its fiscal
targets, as well as maintaining spending close to the limit of the amount
budgeted for the social area—since, according to Levy, the ministries
in the social area spent 95.5 percent of what was budgeted for the first four
months of this year, while the other Ministries spent only 68.6 percent.

Some Good Numbers

"The numbers confirm
the significant revival of economic growth, initiated almost a year ago. Following
the difficult process of macroeconomic adjustment, which occurred for the
most part during the first half of 2003, fortunately we can now reap the positive
results."

Finance Minister, Antônio
Palocci, transmitted this optimistic message to a group of entrepreneurs assembled
June 8 in Brasília, at the seminar "Agenda for Sustainable Infrastructrure
Development," sponsored by the Brazilian Association of Infrastructure
and Basic Industries.

According to the Minister,
"this is the correct moment to activate investments in infrastructure
and the expansion of the country’s basic industries."

Palocci informed that
exports through May were up 25 percent this year, compared with the same period
last year. In his view, the success in foreign sales is due not only to the
evolution of agribusiness and various other Brazilian manufacturing sectors,
but also "to the decreased volatility of the exchange rate and the introduction
of various steps to make exportation less bureaucratic, providing greater
agility to the sector and modernizing customs policy."

Palocci stated that domestic
consumption has also been contributing to growth. He informed that retail
sales rose 7 percent this year through March, compared with the same period
last year. In addition, he said, sales of non-durable consumer goods in May
were up over 4 percent in relation to May, 2003.

The Minister also said
that industrial policy, focused on technological innovation and reducing the
cost of capital, will allow the country to attain a new and better level of
efficiency and productivity, assuring the conditions necessary for Brazil
to face the challenges presented by its growing insertion in the world’s commercial
markets.


Gabriela Guerreiro works for Agência Brasil (AB), the official press
agency of the Brazilian government. Comments are welcome at lia@radiobras.gov.br.

Translated
from the Portuguese by David Silberstein.

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