The IMF with multilateral banks and other donors has agreed a $41bn package to help Brazil fend off international currency speculators.
In return Brazil has agreed to drastically tighten government spending across many areas. Whilst available information states that social protection spending is to be protected, some key environmental programmes are to be cut by two thirds or more. Among the programmes which will be scaled back or not funded at all next year are the G7 rainforest pilot programme, coordinated by the Bank, and the “10 per cent” forest protection initiative which Bank President Wolfensohn announced proudly this May. Brazilian NGOs, many of which have worked hard to improve and build support for the programmes, are confused and angry about the move, which results from the IMF‘s position that even projects with a 90 per cent grant element must be counted as government spending, and so cut back.
The World Bank will provide a US$3 billion precautionary loan to Argentina to cope with financial instability and supplement social safety nets.