IMF Says It Plans to Cut Off Credit to Brazil
The International Monetary Fund indicated in an unusual statement Thursday that it intends to cut off credit to Brazil, at least temporarily, because of the country’s failure to get a grip on its inflation rate, estimated at 223% last year.
The cutoff comes just before Tancredo Neves, Brazil’s first civilian president in 21 years, is inaugurated. It caused lending banks to suspend talks on rescheduling about $45 billion of Brazil’s $98-billion debt.
Citibank, which has been headed a negotiating team for hundreds of creditor banks, announced Wednesday that it will be making loans for trade until May 31 and postponing repayments that fall due before that date.
The action by the IMF would cut off disbursement to Brazil of $1.5 billion, the last leg of a three-year program of loans from the fund that was to total more than $4 billion. Closed-door talks between Brazil’s caretaker government and the IMF on what to do about 1985 are due to start next week.
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