Brazil terminates agreement with IMF

IMF agreement no longer necessary, considers government

Antonio Palocci, the Brazilian Minister of the Economy, declared on Monday that Brazil will not renew the agreement with the International Monetary Fund because it is no longer necessary, now that the economic indicators reveal that the Brazilian economy is healthy and stable.

"We can see that the fundamentals of our economy are confirmed with ever more vigorous elements", he stated at a press conference in Brasilia, adding that the external accounts are favourable and that the decision not to renew is the best solution for both parts.

However, Antonio Palocci declared that President Lula's government will proceed with the same degree of rigour, analysing the indicators three times a year. He confirmed the commitment to not increase the tax burden and to fix the primary superavit level at 4.25%, while continuing the policy of reducing Brazil's external debt and maintaining sustainable growth in the long term.

Externally, a greater stability in the markets has created a climate which renders the Brazilian economy less vulnerable and reducing the hypothesis of volatility.

Yesterday's decision is the result of a process which began in 2003, when the Brazilian government signed an agreement with the IMF which would lead to a non-renewal in the short term, on certain conditions. Since September 2003, Brazil has not received any money from the Fund.

This is a clear sign that the Brazilian economy is healthy, it is running well and the policies of the government of President Lula are working.

On the photo: Antonio Palocci