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IMF Lends $3 Billion in Emergency Funds to Brazil - 2002-12-19

The International Monetary Fund, the multi-lateral lender that helps countries in financial distress, says it is lending $3 billion to Brazil as part of its effort to contain the latest debt crisis in Latin America. The IMF plans to extend emergency loans to Argentina as well.

Argentina this week reportedly made a $124 million debt payment to several international creditors, including the IMF. With presidential elections looming, Argentina is scrambling to reactivate an economy hammered by last year's currency devaluation and default on debt payments. IMF spokesman Tom Dawson says the IMF is ready to help once Argentina develops a credible budget plan.

"We recognize it continues to be a difficult situation [in Argentina]. They understand, I think, and you can ask them that we are truly trying to help them," he said. "And I hope we can work something out. IMF shareholders, particularly the United States, the European Union countries and Japan, insist on assurances that Argentina will pay back any additional money it borrows.

On Thursday, the IMF disbursed $3 billion to Brazil, Latin America's biggest economy and largest debtor. Brazil's economy has endured a fall out from the Argentine crisis, the global economic slowdown, and uncertainty in the run up to October presidential elections won by a leftist populist who promised to boost government spending. Brazil's economy has stopped growing and very little growth is expected next year.

The IMF is also preparing emergency help for smaller Latin American economies like Uruguay and Ecuador.