Brazil is seeking a one-year extension of its current loan agreement with the International Monetary Fund. IMF says it hopes to have final approval for the proposal very soon.
Brazil and the IMF have agreed that the country can extend its loan for one year and secure an extra $6 billion in emergency funding that will be drawn only if needed. The move is an effort to end the IMF's financial intervention to help stabilize Brazil's economy.
IMF External Relations Director Thomas Dawson says the IMF welcomes Brazil's proposal.
"The fund has made it very clear that we were respecting and awaiting the Brazilian authorities' judgment on how they wished to proceed and this was their decision which we are delighted to support," he said. "This does require board approval but management will be recommending that."
Mr. Dawson said the agreement should be finalized by the board in December.
On Wednesday, Brazil's Finance Minister, Antonio Palocci, and IMF Deputy Managing Director Anne Krueger announced the plan in Brasilia.
Brazil has drawn about $22 billion on its current $30 billion loan that expires at the end of the year. The extended agreement would create an insurance account of the remaining $8 billion from its current loan, plus the extra $6 billion in new funds. Mr. Palocci says the purpose of the loan is to shield Brazil from shocks to the economy.
The IMF's Mr. Dawson says the government of President Luiz Inacio Lula da Silva has built on the sound economic policies of previous governments.
"[But] I would stress that the Brazilian program is a truly owned program and reflects the strong commitment and perseverance of this new administration," he said. "I think there is a strong track record of good economic management in Brazil that I think is exemplary."
The country, which is South America's largest economy, secured its current loan in 2002 just before Mr. da Silva won the presidential election. Investors had originally feared that he would implement policies that could push Brazil to default on its $250 billion in debt.