World Bank lends Brazil $505 mln, praises programs

Reuters, 03.29.03, 4:53 PM ET BRASILIA, Brazil (Reuters) - The World Bank Saturday extended Brazil a $505 million loan and said the Latin American country could become popular with investors after the end of the U.S.-led war on Iraq. At a press conference after meeting with Brazil's President Luiz Inacio Lula da Silva, World Bank President James Wolfensohn said investors and banks will begin looking for low-risk places to place their cash after hostilities cease. "You do not have the immediate problems that the Middle East does, or the fundamentalism or trans-Atlantic differences that exist today. After we get out of this crazy situation in the world, there could be advantages for Brazil," Wolfensohn said. He was "extremely impressed" by the Lula administration's commitment to austere finances and economic reform plans. The vote of confidence comes amid worries the Iraq war could stymie a budding economic recovery in Brazil if high fuel prices fan an already worrying level of inflation. Brazil is very dependent on foreign investment, which has dropped as companies suspend investments until after the war. The loan is part of up to $10 billion that could be available in Bank funds in the next three and a half years. Contrary to expectations the money would be used for Brazil's new anti-hunger program, Finance Minister Antonio Palocci said it was not earmarked for any specific projects.