[stop-imf] IMF hopes to retain influence in Brazil; Lula agrees

[robert weissman]

  IMF suggests labor reform and Central Bank autonomy

14:41

Mylena Fiori
Reporter - Agencia Brasil


Brasilia =96 Even after Brazil paid off its debt with the International
Monetary Fund (IMF), their partnership will remain, according to IMF
Managing Director, the Spaniard Rodrigo de Rato. He affirms that the job
of the FMI is not only to handle crisis, but also to ensure economic
stability.

In order to sustain this stability, Rato suggested that Brazil should
maintain its fiscal discipline, the reduction of commercial barriers,
the simplification of the processes necessary to open up and legalize
companies, as well as the labor reform. He also suggested greater
operational autonomy for the Central Bank, a measure that, in his
opinion, would "increase the credibility of the inflation goal setting
system and lead to greater reduction of interest rates."

"It=92s a new era. Brazil does not owe any more money to the IMF, but the
Fund will remain a reliable partner," he said. "IMF aims at making
everything possible to support the Brazilian government in the expansion
of its recent successes, the consolidation of the macroeconomic
stability, and in the promotion of reforms, in order to help it realize
its great economic potential and improve the life quality of its
population, specially the poor."

Translation: Andr=E9a Alves

11/01/2006

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http://www.mercopress.com/Detalle.asp?NUM=3D7042

Jan 11, 2006
Lula calls Brazil and IMF partners now that debt is paid

President Luiz Inacio Lula da Silva said Tuesday that Brazil's early
payment of its debt to the International Monetary Fund will not end its
relationship with the IMF, but will make them partners.

"Our relations are not ending. Now our relations are changing in scope
and quality," the Brazilian president said in the presence of IMF
Managing Director Rodrigo Rato, in a ceremony in which Brazil made
official its early payment of $15.57 billion to the Fund.

The debt, for which payment was not due until 2007, had been contracted
in three stand-by agreements, the last of which was approved in
September 2002 during the government of Lula's centrist predecessor,
Fernando Henrique Cardoso.

Rato agreed with Lula that relations between the Fund and Brazil were
entering "a new era." "Brazil is no longer indebted to the Fund, but the
IMF becomes an important partner for Brazil in the debate about economic
policy," said Rato, Spain's former Finance minister.

He added that, in exchange, Brazil can contribute to the debate within
the IMF about the creation of a mechanism that would permit emerging
nations rapid access to financing in emergency situations.

"Brazil has left behind a long period of economic instability. There
will be no more lost decades or debt crises," Rato said.

The IMF chief recalled that three years ago, on the eve of Lula's
election, Brazil was going through "a profound crisis of confidence" and
that many skeptics predicted that it would declare a moratorium on its
debt payment, that the country's currency would plunge against the
dollar, and that the stock market would collapse - but nothing of the
kind has happened.

"Taking advantage of a favourable world economic situation, Brazil was
able to improve its external situation, helped restore confidence and
reduce the country-risk rating to its all-time lowest level," Rato said.

Lula's finance minister and the architect of his government's
conservative monetary and fiscal policies, Antonio Palocci, said that
the decision to pay off the IMF early was a "mature" decision and that
it does not herald a change in Brazil's economic course.