This is Steve Emberwith the VOA Special English program, IN THE NEWS.
The International Monetary Fund has agreed to provide anadditional thirty-thousand-million dollars in loans to Brazil. I-M-FManaging Director Horst Koehler announced the agreement Wednesday.Experts say the loan is designed to ease growing concerns aboutBrazil's financial markets.
The thirty-thousand-million dollarloan is the largest ever given by the I-M-F. Financial experts sayit shows the I-M-F's strong support for the economic program thatBrazil is following. Brazil already received afifteen-thousand-million dollar loan from the I-M-F last year.
Brazil is the largest economy in Latin America. But investors andbankers are concerned about Brazil's huge public debt. It is morethan two-hundred-fifty-thousand-million dollars. There also isconcern about Brazil's presidential election in October. The twomain candidates have sharply criticized the current government'ssupport of I-M-F policies aimed at cutting spending, reducinginflation and increasing free trade.
These concerns have weakened financial markets and caused a sharpdrop in the value of Brazilian money in recent weeks. The governmenthas been forced to pay interest rates of more than thirty-percent onwhat it borrows. Many fear that Brazil may not be able to pay itshuge debt.
The I-M-F loan agreement requires that Brazil keep its budget atthree-point-seventy-five percent of its total economic production.And it must reduce inflation during the next year and a half.
American Treasury Secretary Paul O'Neill visited Brazil, Uruguayand Argentina this week. Uruguay received an emergency loan from theUnited States Monday of one-and-one-half-thousand-million dollars.The loan was made to help Uruguay re-open its banks. They had beenclosed to keep people from withdrawing too much money. On Thursday,the I-M-F agreed to extend its line of credit to Uruguay so it couldborrow more money.
Argentina, however, did not receive help this week. The Americantreasury secretary said the Argentine government must complete moreeconomic reforms and improve its banking system before it canreceive aid. Argentina has one-hundred-forty-thousand-milliondollars in government debt. And it owes large repayments on pastloans from the I-M-F and other international lenders.
About twenty-two percent of workers are unemployed in Argentinaand more than half the country's thirty-six million people are poor.Until recent years, Argentina was South America's richest nation.
Argentines protested Mister O'Neill's visit. They accused theUnited States and the I-M-F of blocking badly needed aid. The UnitedStates is the largest and most influential shareholder in the I-M-F.
Mister O'Neill said he wants to help negotiate an agreementbetween the I-M-F and Argentina to pull the country out of a fouryear recession. .
This VOA Special English program, IN THE NEWS, was written byCynthia Kirk. This is Steve Ember.