FMI

For the first time, the Fund endorses, withexceptions, that impose barriers to emerginginvestment

For the first time in its nearly 70-year history, theInternational Monetary Fund admitted the adoptionof controls on inflows of foreign capital, in a report released yesterday. But the ceiling recommendedadoption of other measures before imposing barriers to capital inflows and advocates caution inthe adoption of controls. The barriers would be the last resort to be used by developing countries. The Brazilian representative at the IMF, Paulo Nogueira Batista, reacted angrily to the recommendations in a time when Brazil faceshuge pressure on exchange rates. "The IMF hasaccumulated knowledge about the subject, "Nogueira said. "Brazil will do whatever it takes tostem the flow of dollars." For the Fund, however,the main instrument used by Brazil to curb the inflow of foreign capital - Increasing the IOF imposed on fixed income investments did not bringthe expected result by the government.