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Brazil to Propose Preventive Agreements to IMF

Brazil’s Minister of Finance, Antônio Palocci, will participate in the annual meetings of the International Monetary Fund (IMF) and the World Bank (IBRD), in Washington (USA).

The Minister’s schedule includes encounters with the Managing Director of the IMF, Rodrigo de Rato y Figaredo, and the US Secretary of the Treasury, John Snow.


Palocci affirmed that, at the meeting tomorrow with representatives of the IMF, the federal government will propose preventive agreements between the Fund and countries facing financial crises.


“The Fund should give priority to preventive mechanisms to help the countries that need it the most,” he said during a ceremony at the Planalto Palace at which a bill was signed creating incentives for the formalization of micro and small firms.


Regarding the Brazilian proposal for a change in the way the primary surplus target is calculated, in order to leave more room for investments in infrastructure, Palocci admitted the possibility that this topic will enter the agenda of debates.


IMF Managing Director Rodrigo de Rato in interview this morning talked about Brazil’s growth projection:


“Brazil is also doing much, much better. In fact, the program has been going very well. Growth was slower to accelerate after the program than we expected, but has now been accelerating faster. We have been revising our growth forecasts up; the central bank has been revising their forecasts up.


“If they did so again today, that is more good news. But our WEO came out, as you know, this week. In order to get our numbers, we were working over the past two months, and at that time I think our estimate was consistent. So, I would take the central bank’s estimate to be more good news from Brazil.


“As the Brazilian government is making public, and we have also, the Brazilian economy is performing better than we expected, which is very good news, and shows clearly that the economic climate and also the political climate are helping very much the country.


“I had the chance to talk with the Brazilian President and economic authorities about three weeks ago, and we believed that it is a very good time for structural reforms to boost Brazil’s growth possibilities in the medium term.


“We see scope for reform very clear scope for reform in many areas, certainly the banking system, to reduce the spreads of the cost of borrowing, also certainly to give more flexibility to the budget, and in other areas like the labor market and the trade sector.


“That has been our public advice to the government. We are working with them in that respect, and also on some technical issues. But we see clearly, and I think it is very visible, that the Brazilian economy is ready to grow more.


“To do that, I think the government has done a very good job in providing it with confidence and macroeconomic stability and reforms. The government has a very important reform agenda. To keep that momentum moving, the reform agenda has to be kept forward.”

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