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Brazilian Official Appeals For Restoration of US Bank Credit - 2002-11-22

A key advisor to Brazil's incoming leftist president has called on the U.S. government to urge major private American banks to restore credit lines to Brazil. The advisor, who spoke at the World Economic Forum conference in Rio de Janeiro, made his appeal directly to a top U.S. Treasury Department official.

Senator-elect Aloizio Mercadante of the leftist Workers Party told an audience of leading Latin American business leaders Friday that Brazil's incoming government has three priorities over the short-term.

"Credit, credit, and credit," he said, to laughter from the audience. "It is absolutely necessary, and nothing justifies cutting our lines of credit." Mr. Mercadante, who is rumored to be Brazil's next finance minister, directed his appeal to U.S. Deputy Treasury Secretary Kenneth Dam, who was seated next to him at the podium of the World Economic Forum conference. Mr. Mercadante said the Bush administration should call the major U.S. banks together, and press them to restore Brazil's credit lines.

Major U.S. and European banks reduced the amount of credit to Brazil by 20 percent, earlier this year, because of concerns that the South American nation might default on its $260 billion debt. The banks also were concerned, prior to the election of Luiz Inacio Lula da Silva, a former labor leader, that he would not honor Brazil's commitments. However, the president-elect has pledged to honor all of Brazil's agreements, including the terms of a $30 billion loan from the International Monetary Fund.

Deputy Treasury Secretary Dam Friday praised these statements by Mr. da Silva, and expressed optimism over the future of relations between the United States and Brazil. However, he ruled out directly intervening with U.S. banks on the credit issue.

"There was a meeting in New York, among the major banks, in September, in which there was an agreement on this subject," Mr. Dam said. "If that is not working, then we would suggest the banks get together again and discuss it. But, beyond that, I wouldn't want to go at this time, because, I think, the U.S. role as a government is best focused on the government to government relations and the relations with the international financial institutions."

In that September meeting, the banks agreed to maintain Brazil's credit lines at the same level.

Senator-elect Mercadante said the credit issue, along with trade, will be president-elect da Silva's top priorities when he meets with President Bush in Washington on December 10.