Brazil Economy On The Up

Winners at the recent G20 Summit in London include Brazil, a newcomer on the world financial scene and one with plenty to say. Brazil’s President, Lula da Silva, is a strong advocate of emerging countries having more influence on the international arena and his country’s injection of funds into the IMF gives Brazil considerably more weight.With its international reserves standing at US$202 billion, Brazil can afford to be generous. It has promised to contribute 5% of its international reserves to the IMF, a sum of some US$10 billion. While the Brazilian input is not in the same league as those contributed by Japan and the EU (US$100 billion each), Brazilian authorities were quick to point out that their 5% is much higher than China’s 2%.

Brazil is one of the few emerging countries in the world today who do not need injections of funds from the IMF. This is a complete reversal of Brazil’s position just four years ago. As recently as 2005, Brazil was a debtor with the IMF when three years after Lula was elected president for the first time, he made the decision to pay off the country’s pending debt. The turnaround from debtor to creditor is a firm indication of Brazil’s strong economic position.

“Brazil currently has a privileged position because it does not need the IMF,” said Gustavo Loyola, former President of the Central Bank. Political analysts believe that the US$10 billion contribution will give Brazil substantially more standing in international politics.

Lula has already brought Brazil into the global limelight and has worked hard at raising his country’s profile. US President, Barack Obama, met Lula for the first time recently and paid him what many consider the ultimate compliment. “This is my man, the most popular politician on earth,” Obama reportedly said on shaking hands with the Brazilian premier.

“Brazil has one of the strongest economy’s today,” says Loxley McKenzie, Managing Director at Colordarcy, “and the latest developments prove that this is a country with a strong financial future and economic model.”

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