IMF signs $10b bond with Brazil

The International Monetary Fund said Friday that Brazil finalized an agreement to buy 10 billion dollars worth of IMF bonds over the next two years.

The purchase, first announced last year, reflects the emerging nation’s rising world clout and turns a former debtor to the IMF into a creditor.

“The agreement offers Brazil a safe investment instrument at the same time as boosting the Fund’s capacity to help its members to weather the global financial crisis,” an IMF statement said.

“The Fund can now add these resources to those already available through agreements signed with other members, which contribute toward an increase in Fund resources that was requested in April 2009 by G20 (Group of 20) leaders and the International Monetary and Financial Committee.”

The deal marks a sharp turnaround from 2002 when Brazil obtained an IMF loan of 30.4 billion dollars, the biggest in the history of the IMF, to avoid a massive debt default.

The combined bond purchase of Brazil, India and China is one-sixth of the total 500 billion dollars pledged by the G20 largest rich and emerging-market economies in April to triple the IMF’s resources.

Source: AFP