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15.06.2009 Business & Finance

Brazil Offers $10 Billion Loan To IMF

By Daily Graphic
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Brazil says it is to offer $10 billion in financing to the IMF to help improve the availability of credit in developing countries.

It is the first time that South America's biggest economy has ever made a loan of this kind.

Brazil's Finance Minister Guido Mantega said it was part of a united approach by Brazil, Russia, India and China to help boost global financial stability.

He said China had plans to invest $50 billion and Russia $10 billion.

In the past Brazil was more accustomed to seeking help from the International Monetary Fund and the fact that it is now able to offer a loan instead,it is a striking indication of how its position has changed.

In tougher times the IMF was a target of enormous resentment and furious protests, because it was seen, particularly by the left, as a tool for Washington to impose its terms on Latin America.

The loan announcement came just a day after South America's biggest economy entered a technical recession - but one that at least some analysts are predicting will not last for long.

The Brazilian government currently has around $200 billion in international reserves and it is to use money from there to invest in IMF bonds, in order to help make credit available in other developing nations.

Mr Mantega said the move was part of a joint approach by the so-called Bric countries - Brazil, Russia, India and China.

The term has been used to group these four nations together, because of their developing economic strength.

There are signs that the four countries are now starting to consider the wider potential of acting in unison, with Brazil in particular encouraging this strategy.

The Bric countries will hold their first major summit in Russia next week, and an ambitious agenda will include discussion of the need to revamp the international financial system —BBC

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