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The country agreed to buy US$ 10 bn in International Monetary Fund bonds during the G20 meeting, in London. The IMF is collecting another US$ 500 bn to assist nations in difficulties.
Brasília – The Finance minister of Brazil, Guido Mantega, formally announced today (5),in Turkey, that Brazil is going to acquire US$ 10 billion in International Monetary Fund (IMF) bonds. After revision, the agreement should be sent to the Executive Board at the fund, for approval. For the first time in history, Brazil becomes an IMF creditor, instead of a debtor.
According to figures disclosed by the Finance Ministry, at a meeting with the managing director at the IMF, Dominique Strauss-Kahn, the minister made official the decision of signing an agreement for purchase of bonds with the institution, with the only step pending being the final revision by technical instance of the government.
In April this year, the IMF invited Brazil to become one of the organization's creditors and the government of Brazil accepted the proposal. At the time, Mantega was participating in the G20 meeting in London, and it was decided that the stronger nations, "with funds available", would invest for the fund to have another US$ 500 billion to help nations in difficulties.
Two months after the invitation, the minister announced that Brazil will make available US$ 10 billion for the fund. The operation for acquisition of the IMF bonds includes Special Drawing Rights (SDRs),a kind of currency issued by the fund, with interest paid quarterly, based on rates established by the institution. These interest rates are a pondered average of short-term interest rates of the United States, the Euro Zone, Japan and the United Kingdom, and are currently at 0.25%.
The ministry press statement shows that the papers will be issued according to the funds needs of resources within "the span for repayment of the IMF loans (three years, with a grace period of one quarter and five years in total)”.
The Finance minister is in Istanbul, Turkey, where he is participating in the IMF and World Bank meeting, amidst talks about greater participation of emerging nations in both multilateral organisations. Apart from Mantega, the Central Bank president, Henrique Meirelles, is also at the meeting as a representative of Brazil.
The press statement officialising the loan by Brazil to the fund was disclosed in Brasília and points out that amidst the greatest economic crisis since the Great Depression of the 1930s, apart from not needing financial support of the IMF, Brazil can loan an expressive volume of funds to the institution.
The document also shows that the agreement is part of a decision to expand the IMF's lending capacity, as agreed with the leaders of the G20. With this objective in mind, several countries (Japan, Canada, Norway, France, the United Kingdom, Germany, Switzerland, Spain and the Netherlands) have already concluded bilateral agreements for loans, approved by the fund's Board. In the case of the Bric countries (Brazil, Russia, India and China),the option was for the purchase of papers. The agreement with Brazil should be for a two-year duration.
Source: Agência Brasil - 05.10.2009
Brasília – The Finance minister of Brazil, Guido Mantega, formally announced today (5),in Turkey, that Brazil is going to acquire US$ 10 billion in International Monetary Fund (IMF) bonds. After revision, the agreement should be sent to the Executive Board at the fund, for approval. For the first time in history, Brazil becomes an IMF creditor, instead of a debtor.
According to figures disclosed by the Finance Ministry, at a meeting with the managing director at the IMF, Dominique Strauss-Kahn, the minister made official the decision of signing an agreement for purchase of bonds with the institution, with the only step pending being the final revision by technical instance of the government.
In April this year, the IMF invited Brazil to become one of the organization's creditors and the government of Brazil accepted the proposal. At the time, Mantega was participating in the G20 meeting in London, and it was decided that the stronger nations, "with funds available", would invest for the fund to have another US$ 500 billion to help nations in difficulties.
Two months after the invitation, the minister announced that Brazil will make available US$ 10 billion for the fund. The operation for acquisition of the IMF bonds includes Special Drawing Rights (SDRs),a kind of currency issued by the fund, with interest paid quarterly, based on rates established by the institution. These interest rates are a pondered average of short-term interest rates of the United States, the Euro Zone, Japan and the United Kingdom, and are currently at 0.25%.
The ministry press statement shows that the papers will be issued according to the funds needs of resources within "the span for repayment of the IMF loans (three years, with a grace period of one quarter and five years in total)”.
The Finance minister is in Istanbul, Turkey, where he is participating in the IMF and World Bank meeting, amidst talks about greater participation of emerging nations in both multilateral organisations. Apart from Mantega, the Central Bank president, Henrique Meirelles, is also at the meeting as a representative of Brazil.
The press statement officialising the loan by Brazil to the fund was disclosed in Brasília and points out that amidst the greatest economic crisis since the Great Depression of the 1930s, apart from not needing financial support of the IMF, Brazil can loan an expressive volume of funds to the institution.
The document also shows that the agreement is part of a decision to expand the IMF's lending capacity, as agreed with the leaders of the G20. With this objective in mind, several countries (Japan, Canada, Norway, France, the United Kingdom, Germany, Switzerland, Spain and the Netherlands) have already concluded bilateral agreements for loans, approved by the fund's Board. In the case of the Bric countries (Brazil, Russia, India and China),the option was for the purchase of papers. The agreement with Brazil should be for a two-year duration.
Source: Agência Brasil - 05.10.2009
