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IMF: Argentina Crisis Hurts Brazil

By: The Associated Press
The Washington Post, February 7, 2002

Brasilia, Brazil –– Argentina's economic crisis will cost Brazil as much as $2 billion in lost revenue this year, a top International Monetary Fund official said Thursday.

Brazil expected a trade surplus of dlrs 6 billion in 2002, but the decline of exports to Argentina will probably reduce it to between $4 billion and $5 billion, said Lorenzo Perez, head of an IMF mission to Brazil.

"We're still working on projections but there is a concern over the effect of Argentina," he said.

Perez met with Finance Minister Pedro Malan this week to discuss possible changes in the terms of a $15.2 billion loan agreement reached in September.

Under the agreement, Brazil pledged to keep inflation under 6.2 percent this year. Perez said he thought the government's target of 3.5 percent inflation and 2.5 percent growth this year was feasible.

The IMF loan is Brazil's second in three years. In 1998, Brazil secured a $41.5 billion loan to stabilize its currency amid the turmoil of the Asian crisis. But the government didn't use all the money and has repaid most of it.

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