Brazil, IMF discuss policy options, not cash
Reuters, Tuesday, September 22, 1998 at 16:38
WASHINGTON, Sept 22 (Reuters) - Brazil is discussing policy
options with officials from the International Monetary Fund,
but Latin America's largest economy has not asked the IMF for
financial help, international monetary sources said on Tuesday.
The sources, who asked not to be identified, said the two
sides were in constant discussions about the Brazilian economy
and about its economic policy. "It is part of the surveillance
role of the IMF," said one source.
"There has been no request for money," a second source said
firmly.
IMF officials have repeatedly said they are ready to help
countries which ask for financial assistance and which adopt
appropriate economic policies.
They have said that they are in talks with the Brazilian
authorities, but not about loans, and many Washington experts
say privately that Brazil is unlikely to ask for cash before
its Oct. 4 presidential election.
Brazilian officials say they are discussing a "crisis
prevention program" with the fund.
But speculation has grown on financial markets that Brazil
will need an international rescue package like those put
together last year for the troubled economies of Thailand,
Indonesia and South Korea.
These rescue deals included large loans from the IMF,
promises of bilateral help and credits from other international
institutions like the World Bank.
A World Bank source said the lending institution was ready
to take part in any international rescue package for Brazil,
but she declined further comment.
"The World Bank stands ready to be a significant contributor
in any international package of support agreed in support of
Brazil," she said.
The Inter-American Development Bank has already announced
its intention to approve new money for Wednesday and it expects
to approve a $1.1 billion loan on Wednesday, the largest loan
it has ever issued.
An IADB spokesman said Brazil's loan would support small
business development, financial sector reform, and private
sector projects in the health and education sectors.
The Asian rescue packages have drained IMF resources to
what the fund says is an uncomfortable level and fund experts
say they now have just $5-9 billion available to lend from
normal reserves.
This means that any rescue deal for Brazil or any broader
package for Latin America would have to tap the emergency
resources of the General Arrangements to Borrow, a fund to be
used when financial problems threaten the world economic
system.
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Copyright 1998, Reuters News Service |
