IMF Approves $1.4-Billion Loan to Brazil

The International Monetary Fund on Wednesday said it approved a $1.4-billion loan to assist economic reform in Brazil.

The loan approval followed an agreement by commercial banks to provide $5.2 billion in new credits for the country.

Brazil, the Third World’s largest debtor, has a foreign debt of about $120 billion.

The IMF said in a statement that the Brazilian reform program seeks to create “the conditions for sustained growth by reducing inflation, strengthening savings . . . and reducing disparities in income distribution.”

The Washington-based IMF and the Brazilian government have had a rocky relationship in recent years as Brazilians chafed at the stringent economic conditions attached to IMF help.

In July, when Brazil formally asked the IMF for the loan, the letter sent was the first such document from Brazil to the IMF since President Jose Sarney came to power in 1985.

The loan request marked Brazil’s gradual return to the world financial community since it suspended interest payments to its commercial bank creditors in February, 1987.

Brazil’s goals, presented in its letter to the IMF, focused on controlling inflation and restoring economic growth.

The reforms, the IMF said, will allow market forces to play a larger role in Brazil’s economy and redefine the role of the state, including “narrowing the scope of government regulations and the privatization of state enterprises.”

The loan can be drawn on between now and Feb. 28, 1990, the IMF said.