Brazil Repays Early US$ 2.6 Billion Debt With Paris Club and Saves US$ 100 Million

Brazil will pay off a US$ 2.6 billion debt with the Paris Club in January. This is a debt that was contracted in 1983 and was to have been paid off by December 2006 in three installments of US$ 860 million in January 2006, June 2006 and December 2006.

This is the second anticipation of a debt payment Brazil has made this month. It recently paid off US$ 15.5 billion to the International Monetary Fund.

According to the head of the secretariat of the National Treasury (Tesouro Nacional), Joaquim Levy, Brazil’s "healthy economy" and solid foreign accounts are making it possible to anticipate debt payments. The anticipation will represent an economy of US$ 100 million for Brazil.

Brazilian Minister of Finance, Antonio Palocci, announced earlier this month that Brazil was anticipating the payment of an International Monetary Fund loan of US$ 15.5 billion, which would mean an economy of around US$ 900 million in interest payments. The loan was to have been paid off in installments ending in December 2007.

Palocci pointed out that whereas the country’s total reserves were US$ 15 billion in 2003, today the country has US$ 51 billion, above the IMF loan amount, so the payment will not have a negative effect on its international reserves.

For Brazilian President Luiz Inácio Lula da Silva, the decision to anticipate paying off the IMF debt shows that Brazil can control its own destiny.

"We are making this payment because we want to show the world and the market that we are in charge. When we do things we might make mistakes or we might get things right, but we decide," said the President.

ABr

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