Brazil becomes creditor, as external debt decreases

Business Materials 22 February 2008 00:21 (UTC +04:00)

( dpa ) - For the first time in its history, Brazil became in January an external creditor - with foreign assets greater than its external debt, the Brazilian Central Bank said Thursday.

According to the South American giant's monetary authority, in the first month of the year Brazil's foreign exchange reserves surpassed by about 4 billion dollars its total public and private foreign debt.

In December, Brazil's foreign debt totalled 197.7 billion dollars, with the country holding 180.3 billion dollars in foreign exchange.

In late January, following the purchase of dollars by the Central Bank, reserves increased to 187.5 billion dollars.

The Brazilian Central Bank did not mention the exact amount of its foreign balance at the end of January, but said "in the first month of 2008 that amount is estimated to have already turned negative by more than 4 billion dollars, meaning that the country became a net external creditor."

The Central Bank defined the change as "an unprecedented event" in Brazilian economic history.

This, along with the strong inflow of foreign direct investment and consecutive surpluses in Brazil's commercial balance in recent years, shows an "unquestionable strengthening in the country's external position."

"In the face of an international backdrop marked by a significant increase in uncertainty, by the volatility of financial markets and by the deceleration of economic activity, the improvement in those figures tends to palliate the impact of adverse external events, albeit not cancelling it out completely," the statement said.