Brazil Seeks More IMF Influence After Loan Promise: Week Ahead

By Andre Soliani
April 20 (Bloomberg) -- Brazil will try to convert a promise to lend more money to the International Monetary Fund into more say on how the agency spends as much as $750 billion to rescue crisis-stricken nations, a former IMF official said.
“The fact you become a potential creditor makes your voice stronger,” Claudio Loser, head of the IMF’s Western Hemisphere Department from 1994 to 2002, said in a telephone interview from Washington. “Brazil has been pushing very hard, together with countries such as India, China and Mexico, for the fund to better reflect the importance of emerging economies.”
Finance ministers and central bank governors from the IMF’s 185 member-nations will meet this week in Washington to carry out recommendations by the Group of 20 to increase lending as the global crisis deepens. The IMF is leading global efforts to assist developing countries hurt by falling commodity prices, capital flight and vanishing credit.
Brazil, which owed the fund $33.9 billion just five years ago, was included this month in a list of 47 countries that are ready to support the IMF. Brazil pledged to advance up to $4.5 billion to the international lender.
President Luiz Inacio Lula da Silva’s administration is carrying out a “deliberate” effort to increase its influence, Loser said. Among the country’s goals is to push for the IMF’s first managing director from a developing nation.
More Lending
Romania agreed to a 20 billion-euro ($26 billion) IMF-led financing package last month to help stimulate growth and finance its current-account and budget deficits, while Ukraine asked for a $16.4 billion loan. Latvia, Serbia and Iceland have also sought help from the IMF to shore up their finances.
In response to demands from members, including Brazil, the IMF relaxed loan conditions in March for emerging nations in need of short term assistance.
“Isn’t it chic that Brazil is lending money to the IMF,” Lula said on April 2.
The stance by Latin America’s biggest economy contrasts with Mexico, the second-largest in the region. Mexico said on April 1 it’s seeking a $47 billion credit line from the IMF and will tap a $30 billion swap line with the Federal Reserve to shore up investor confidence.
Room to Lend
“Brazil is one of the few countries that in the middle of the world economic crisis has the room to become an IMF creditor,” Rogerio Oliveira, head of emerging-markets quantitative research at Barclays Capital, said in a telephone interview from New York. “The move certainly increases the country’s bargaining power.”
The IMF has been headed by Europeans since it was created after the end of World War II. In 63 years, four Frenchmen, two Swedes, a Dutchman, a Spaniard, a German and a Belgian have been elected as managing director of the institution originally founded to ensure exchange rate stability.
“The Europeans will fight like a mad dog to keep the job,” Loser said. “But today I can see a non-European winning the position easily.”
Brazil Markets Last Week
Last week, the real weakened to 2.1952 per dollar, from 2.1740 on April 10. The yield on the government’s zero-coupon bond due January 2010 rose to 9.92 percent from 9.76 percent the previous week.
The benchmark Bovespa index gained to 0.5 percent last week with Tim Participacoes SA, Brazil’s third-largest wireless carrier, leading the gain after jumping 14 percent. Goldman Sachs Group Inc. analysts recommended buying the stock in an April 13 note that said its shares were undervalued.
Cosan SA Industria & Comercio, the world’s biggest sugar- cane processor, dropped 17 percent on speculation the government may cut diesel and gasoline prices, reducing demand for the company’s ethanol.