Changing relationship is a sign of Latin America's rising power
In an act of political expediency that signals growing economic prowess, Brazil opted not to renew its accord with the International Monetary Fund (IMF) on March 31. The country's economy grew 5.2 percent in 2004 and record trade surpluses have yielded enough cash to service its debts, including $846 million in interest it will pay the IMF this year.
President Luiz Inacio 'Lula' da Silva, who is up for re-election next year, is likely to receive high praise for the move from his supporters and others in Latin America, who argue that IMF policies have caused economic failures in Brazil and led to massive poverty.
Brazil and the IMF will continue to work together, along with the Inter-American Development Bank, in a three-year pilot program that will allow Brazil to spend $1 billion a year to develop its infrastructure, something long ignored under previous IMF budget restrictions.
Brazil's decision, and the IMF's recent approval of Argentina's plan to pay off only 76 percent of its debt, is reflective of Latin America's emerging power in developmental institutions. This influence grew stronger when leaders of Venezuela, Argentina, and Brazil signed an accord March 2 to negotiate their debt as a bloc.
With more control over development dollars and a prosperous
economic outlook, the real test for Brazil is whether it can
translate this success to reducing poverty in a country where
one-third of its citizens live on less than $2 a day.
-- Grace Hanson
Go there >>IMF on the Ropes in Brazil
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