Brazil passes on standby credit renewal

The Brazilian government said yesterday that it will not renew a $14bn (€10.8bn) standby credit agreement with the International Monetary Fund, a decision that drew applause even from the opposition.

Finance Minister Antonio Palocci said Brazil has told the IMF it won’t renew the 2003 agreement, an extension of a 2002 accord signed when Brazil faced national elections and markets were in turbulence.

IMF officials have said the institution was open to another renewal of the agreement, which expires this week. But the government has suggested it is content with Brazil’s solid economic performance.

Palocci has helped Brazil generate federal budget surpluses while controlling inflation. Dispelling the uncertainty that prevailed when the Workers Party took power, the government saw Brazil’s gross domestic product expand a hefty 5.2% in 2004.