The International Monetary Fund (IMF) is pleased with the results achieved by the Brazilian economy, according to the institution’s director-general, Rodrigo de Rato.
During a ceremony in the Planalto Palace to officialize the liquidation of Brazil’s debt to the Fund, Rato praised the country’s economic policy.
"These accomplishments are very significant, and much is due to the government’s firmness in applying prudent macroeconomic policies and to the credibility and soundness of the institutions responsible for the country’s macroeconomic policy," he reiterated.
He gave as an example the decision in the initial weeks of president Luiz Inácio Lula da Silva’s Administration to raise the primary surplus target. The primary surplus represents what the government saves, by reducing expenditures, to repay interest on its foreign debt.
"This decision was fundamental for establishing policy direction and restoring confidence," he assessed. Rato also commended the country’s monetary policy, "managed with expertise and determination." The system of inflation targets and the maintenance of floating exchange rates were singled out for special mention.
"Based on the vigor of its policies and the credibility of its institutions, Brazil finally relegated to the past a long period of macroeconomic instability. As a result, there will be no more lost decades, debt crises, or emergency financial packages, but there are still various challenges to be overcome," he emphasized.
He talked in the presence of President Lula and various ministers, including the minister of Finance, Antonio Palocci, as well as the president of the Central Bank, Henrique Meirelles, the secretary of the Federal Treasury, Joaquim Levy, bankers, and entrepreneurs.
Rato observed that three years ago, when Brazil signed its last agreement with the IMF, the country was in the throes of a crisis of confidence.
"Many skeptics predicted that the country would have to declare a debt moratorium, that the currency would enter into collapse, and that we would quickly witness a return to the days of chronic high inflation. Three years have made an enormous difference!" he proclaimed.
To illustrate this difference, the IMF director-general mentioned the growth in production and employment, the increase in social program spending, and the diminution of the poverty index since Lula took office, from 36% in 2002 to 25% in 2004.
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