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The government will lend the IMF US$ 10 billion, purchasing part of the US$ 500 billion in bonds of the institution. Said bonds will be issued to allow the Fund to continue lending and imposing its policies on countries, such as privatisations and social spending cuts, which have proven a failure in view of the global crisis. Therefore, to be an IMF creditor implies to take away the resources needed for Brazilian pressing social demands in order to implement and strengthen the Fund’s proven failed policies.

So, to be an IMF creditor is the worst possible measure to face the crisis. Before the crisis, the IMF was almost bankrupt and Brazil is playing the shameful role of reviving this institution.

In fact, the government had already announced it would lend money to the IMF but had not revealed the amount of said loan.

The announcement that Brazil will allocate US$ 10 billion to the IMF comes as an infamy, just when the country has fallen into a technical recession, caused by a GDP decline also in the first quarter of 2009, with serious social spending cuts, drop in tax collections, serious social problems in municipalities, aggravated by floods and droughts, students protesting for education improvements in various states, public health care of very poor quality, a land reform that could not be further pursued owing to the lack of resources, pensioners that have seen minimum pension increases vetoed, civil servants with wage increases threatened, among many other problems.

While the population faces all facets of the recession, debt expenditures continue to be the number one priority: since January 2009 until May 7 2009, the public debt monopolised no less than R$ 81.5 billion(*) of the federal budget, which accounts for 5 times the amount spent on health care, 10 times the amount spent on education, 8 times the amount spent on social aid, 35 times the amount spent on agriculture, or 168 times the amount spent on the land reform.

Nor does this IMF “creditor” status free us from the impositions of the Fund, whose recipe book has already been incorporated to the government agenda, such as generating primary surplus to the detriment of social needs; maintaining high interest rates in spite of the recession; social spending cuts; maintaining the freedom of capital in spite of the speculative attacks that ensure billions in profits for banks, among other privileges to the financial sector. Notwithstanding the fact that the Fund and its new funders – such as Brazil – have stated that the new line of IMF credits fail to include the well-known economic policy conditionality (such as primary surplus, for instance), said line can only be granted to the countries that practise such policies.

During all votes in Congress, the government bloc has shown its submission to public indebtedness and IMF policies: it has already refused to increase health resources in the regulation of the Constitutional Ammendment 29; it has refused to approve the projects that recover the value of pensions; it has refused to revoke the veto of President Lula on the increase of pensions approved by Congress in 2006; it fails to adequately recompose the resources lost by states and municipalities during the crisis; it has refused to stop deviating education resources. At the same time, the government bloc has approved the Provisional Measures 435 and 450, which have already allocated no less than R$ 50 billion in resources legally related to strategic areas to pay the public debt.

It is also important to remember that the same government bloc approved the IMF reforms in Congress: Pension Reform (that eliminated the historical rights of pensioners), Tax Reform (that maintained the instruments used to ensure debt payment), Bankruptcy Law (that gave priority to financial creditors and overshadowed the rights of workers of bankrupt companies) and now wants to approve the ill-fated project of State Foundations, which implies the privatisation of health-care services and several other essential public services.

That is: the above are important examples that Brazil is undergoing a serious debt crisis and remains submissive to the IMF.

To be an IMF “creditor” now will additionally imply a financial loss for the country, once the IMF bonds (which will only yield 0.46% annually) are purchased by the Central Bank using dollars from exchange reserves, which are obtained at the expense of more internal indebtedness, which currently pays 9.25% annually.

The public debt continues to be the focal point of national problems and one of the main causes of the lack of respect for human rights that we witness daily in our country, where the basic rights to health care, quality education, decent pensions, among many other rights, are systematically denied to those that need them the most.

On account of all the above, we strongly repudiate the US$ 10 billion dollar loan to the IMF.

(*) The current exchange rate for the Brazilian Real is approximately US$0.50.

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