Brazil's debt crisis is over and the country has emerged as a net foreign creditor for the first time, the Central Bank said.
The nation's foreign cash reserves in January exceeded the entire foreign debt of Brazil's government and individual companies combined by about US$4 billion (€2.7 billion), the bank said in a report released Thursday.
"It's the first time in the history of Brazil that we are not debtors," said Finance Minister Guido Mantega.
Brazil's new status as a creditor could improve its debt rating to investment grade, which would lower Brazil's borrowing costs for future loans, Mantega said.
Brazil, which defaulted on its debt in the 1980s and declared a moratorium on debt payments, is riding a boom in demand for key exports such as beef, iron ore and soy. International reserves nearly tripled from US$64 billion (€43.1 billion) in 2003 to US$188.2 billion (€127 billion) this week, the bank said.
Brazil's trade surplus came in at US$40 billion (€27 billion) last year. Coupled with rising foreign investment and fueled by Brazil's high domestic interest rates, net currency inflows reached a record US$87.5 billion (€59 billion) in 2007.
The Central Bank credited the improvement to an aggressive policy of debt reduction in recent years — something few economists expected when President Luiz Inacio Lula da Silva, a former labor union leader and leftist firebrand, was first elected in 2002.
Silva fully repaid Brazil's debt with the Washington-based International Monetary Fund, for years the target of leftist protests that urged Brazil to boycott debt payments.
http://www.iht.com/articles/ap/2008/02/22/business/LA-FIN-Brazil-Debt.php
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