Brazil’s Foreign Debt Drops US$ 13 Bi to a Still Hefty US$ 201 Bi

Brazil’s net foreign trade, service, and financial accounts in February resulted in a US$ 4.792 billion balance of payments surplus. The overall surplus for the first two months of the year amounted to US$ 6.817 billion, 75% more than the US$ 3.896 billion registered during the same period in 2004.

This information is contained in the External Sector report for February, released March 21 by the head of the Central Bank’s (BC) Economic Department, Altamir Lopes.


He informed that the financial account showed a US$ 4.407 billion surplus, while the country’s current accounts netted US$ 117 million in transactions abroad.


According to Lopes, the prime mover continues to be the trade balance, in which the excess of exports over imports generated a surplus of US$ 2.786 billion in February.


This performance, in his view, keeps up the healthy pace of foreign sales, a consequence of the favorable moment in world trade.


The trade surpluses more than compensate the increase in expenditures on foreign services, which totaled US$ 369 million in February, 104.6% more than what was spent on this item in February, 2004. Most of this money was spent on equipmental rentals and royalty and licensing fees.


According to the BC economist, net transfers of income abroad came to US$ 2.5 billion, 39.8% more than in February, 2004. Returns on foreign direct investments accounted for US$ 1.360 billion, while foreign portfolio investments yielded another US$ 1.290 billion in profits, dividends, and interest on fixed income applications.


Lopes also informed that foreign direct investments (FDI) during the month totaled US$ 869 million, 15.1% less than the US$ 1.024 billion that entered the country in February, 2004.


He said, however, that this amount exceeded the earlier forecast of US$ 700 million and that the total for January and February attained US$ 2.088 billion, as against US$ 2.016 billion over the same period last year.


The BC expects better results in March, since, as of yesterday, the bank had already registered US$ 1 billion, according to Lopes. The expectation, he says, is to end the month with US$ 1.3 billion in FDIs.


He also makes a positive prognosis for the foreign current accounts surplus, since the amount of transferred profits and dividends resulting from such investments will be smaller this month.


Regarding international reserves, Lopes said that the BC possessed US$ 59.017 billion in foreign currency in February, a US$ 4.995 billion increase for the period.


The bank’s reserves were bolstered by the purchase of US$ 3.7 billion in auctions held by the bank and the proceeds from sales of Euro-15 and Global-25 bonds, US$ 652 million and US$ 1.250 billion, respectively.


The country’s foreign debt amounted to US$ 201.4 billion in December, 2004, US$ 13.6 billion less than in December, 2003.


Translation: David Silberstein
Agência Brasil

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