Word: imf
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...Worth raising a glass to, right? But all last week's election in Brazil got from Wall Street was a Bronx cheer. The Brazilian currency, the real, continued a slide that, apart from a brief rally after an International Monetary Fund (IMF) rescue package last August, has gone on all year. In the markets, interest rates on Brazilian bonds (a proxy for the extent to which Wall Street regards investment in Brazil as a risk) are running more than 20 percentage points above comparable U.S. securities...
...other candidates - and certainly better than most international investors. "If international economists were always right, all we would need is to hire 10 Nobel Prize (winners) and let them run the country," he said in a recent interview. Lula has also pointedly declared his intention to reject IMF demands on inflation targets if he believes those hamper the growth of Brazil's economy...
...Lula quite the bogeyman that he seems to be in the minds of Wall Street? And would he, as president, challenge the IMF, reverse free market reforms, and cut ties with the international investing community...
...answer is also "no", because Lula knows that economic autarchy is not an option for the export-driven economic powerhouse. The recent $30 billion stand-by credit approved by the IMF on September 6 - the largest ever granted to any country - is scheduled to be released in stages, the bulk of it delivered in 2003 only if Brazil complies with the "relevant criteria" established by the Fund. And that's a strong inducement for Lula to not stray too far from the IMF's program...
...promises of meaningful reforms aimed at developing a more responsive state, creating a stronger and broader domestic consumer base and strengthening Brazil's position in hemispheric affairs. But none of that will be possible by isolating Brazil from international investors, whose outlook may be more conditioned by the IMF orthodoxy of the recent past that has little sympathy for government spending on social programs to alleviate economic distress among the urban poor. Indeed, the socialist Lula's greatest challenge may lie in persuading local and international investors that his policies are the ones that will secure the long-term future...