The International Monetary Fund has thrown a $30 billion cash lifeline to Brazil.
The fund's biggest bailout ever is seeking to shore up a Brazilian economy that has been pummelled by investor angst ahead of presidential elections.
The package, which by far surpassed analysts' expectations, also allows Brazil to spend an additional $10 billion of its net foreign currency reserves to protect the local currency from a crisis of investor confidence over the October vote.
The 15-month deal effectively gives Brazil $40 billion of extra cash to help avert a financial meltdown, sparked by worries that the next administration will shatter macroeconomic stability and default on a $250 billion net public debt load.
The size of the deal was a sign that the United States, the IMF's largest shareholder, would avert at all costs a meltdown of Latin America's biggest economy, which would send shock waves to Europe and beyond, economists said.
In return for the cash, the IMF requires Brazil to post a primary surplus target of at least 3.75 per cent of economic output in 2003 - a target to be revisited quarterly. The deal also demands that same level of primary budget surplus to be targeted in Brazil's budget guidelines law for 2004 and 2005.
The bulk of the loan, 80 per cent or $24 billion, will be released in 2003, meaning their disposal will depend on the new president's commitment to the surplus target.
