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Last Updated: Friday, 23 December 2005, 07:10 GMT
Brazil pays Paris Club debt early
President Luiz Inacio Lula da Silva
President Lula's government is facing elections in 2006
Brazil has announced plans for another early resettlement of its international debts - this time to the Paris Club of creditor nations.

The government said it would repay the remaining $2.6bn (1.5bn) it owes the group ahead of schedule in January.

Earlier this month, Brazil said it would pay off its entire $15.5bn debt to the International Monetary Fund (IMF) two years earlier than required.

Brazil said the move reflected the improving performance of its economy.

Brazil's economy is set to grow by close to 5% in 2006, thanks to falling interest rates and an improved investment environment, said Finance Minister Antonio Palocci on Friday.

Corruption scandals

Treasury Secretary Joaquim Levy said paying the 19-member Paris Club back early would save Brazil about $100m in interest payments.

"Instead of paying during the course of the year, we will pay at the start of the year. We are going to pay it early," he said.

Brazil's previous decision to settle up early with the IMF was followed by a similar announcement from Argentina, which pledged to repay its $10bn debt to the international lender three years ahead of schedule.

Brazil's move to repay its Paris Club debt early comes as President Luiz Inacio Lula da Silva prepares to face the electorate in 2006.

His ruling Workers' Party has been struggling amid a number of corruption scandals.


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