The Managing Director of the International Monetary Fund (IMF), Rodrigo Rato, said today, in a note released by the institution, that increased Brazilian government investment is important to raise productivity and remove the bottlenecks that block economic development.
In the note Rato commends Brazil’s economic policy and says that the advances achieved by the Brazilian government are quite impressive.
“President Lula’s administration has been upholding consistent macroeconomic policies and formulated an ambitious roster of structural reforms. These courageous policies bore fruit,” says Rato, citing the reduction of Brazil’s vulnerability and the country’s capacity to protect itself against external shocks.
Rato also refers to the growth in the Brazilian Gross Domestic Product (GDP), which he regards as solid, and the good export performance.
According to him, the agreement that will be concluded this month between the government and the IMF is proceeding in accordance with the expectations of the Fund’s executive board.
“My conversations with President Lula focused on future challenges. I share the President’s optimism over Brazil’s growth prospects. We agree that it is essential to ensure the sustainability of the economic recovery in the medium term through the maintenance of prudent macroeconomic policies, new advances in the structural reforms, and constant attention to guarantee that the benefits of growth will be shared with the less privileged,” Rato added.
Last month, an International Monetary Fund mission visited Brazil for a third revision of the almost US$15 billion preventive loan Brazil negotiated at the end of last year.
The head of the mission, Charles Collyns, said he would recommend approval. That will give Brazil the right to withdraw funds totalling US$ 1.3 billion.
However, both president Luiz Inácio Lula da Silva and the Minister of Finance, Antonio Palocci, have said the country will not touch the money. They have also said that Brazil does not intend to renew the agreement when it expires in 2005.