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Fri, Jun 12, 2009 - Page 10 News List

Brazil announces US$10 billion loan to the IMF

AFP , BRASILIA

Brazil said on Wednesday it would, for the first time, lend US$10 billion to the IMF, an effort to boost the organization’s reserves.

The loan — which comes in the form of bond purchases — reverses a flow of credit extended to Brazil over decades, though which the IMF has sought to promote economic reforms in the country.

Finance Minister Guido Mantega said Brazil would buy US$10 billion in IMF bonds, allowing the US-based body to help countries affected by the financial crisis.

“It’s true that Brazil is applying part of its reserves and is giving the IMF a financial capacity to be able to help emerging and developing countries in credit difficulty because of the financial crisis,” he said.

“Most of our reserves are tied up in US Treasury bills, which, it has to be said, are making us very little,” he said.

Mantega said it was the first time Brazil had made a loan to the IMF.

IMF chief Dominique Strauss-Kahn welcomed the move, saying: “Brazil once more reaffirms its strong role as a leading emerging market economy.”

“The Brazilian authorities have shown great leadership and engagement in the whole process of IMF reform and expansion of our funding, and I am pleased that Brazil is clearly showing its strong support to the international ... financial system,” he said.

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