Government settles debt with Mercosur fund after almost ten years of default – 04/19/2023 – Market

The government of Luiz Inácio Lula da Silva (PT) concluded this Tuesday (18) the payment of the debt of US$ 100 million (about R$ 500 million) with Focem (Fund for the Structural Convergence of Mercosul), after almost ten years of default.

In 2014, the country stopped making contributions to the mechanism, which aims to reduce asymmetries in the regional bloc. Upon settling the amount owed, the country will once again have access to a fund of approximately R$350 million for projects submitted by Brazilian states and municipalities with a focus on border regions of Mercosur countries — Brazil, Paraguay, Uruguay and Argentina.

Priority will be given to urban infrastructure, security, basic sanitation and health actions, for example, which have a direct impact on the lives of the local population.

Renata Amaral, Secretary of International Affairs and Development at the Ministry of Planning and Budget, points out that the country takes control of defining, in fact, strategies and projects that would be priorities for the Brazilian government.

“From the settlement of the debt, Brazil will be authorized to use the R$ 350 million in resources from the fund to which it is entitled for projects of interest to it”, he says.

She also points out that the Focem payment “reinforces Brazil’s commitment to Mercosur partners, as well as makes clear, once again, the country’s interest in promoting regional integration.”

Since taking office in January, the government of President Luiz Inácio Lula da Silva has reformulated Brazilian foreign policy. At Itamaraty, for example, secretariats dedicated to Latin America and the Caribbean, Africa and the Middle East and Climate, Energy and Environment were recreated.

One of the priorities is to rebuild bridges with Latin American countries, particularly in international forums such as Unasur (Union of South American Nations) and Celac (Community of Latin American and Caribbean States).

In the case of Focem, the Ministry of Planning is the body responsible for analyzing the projects presented by states and municipalities that depend on the availability of funds from this fund to be taken forward —a stage that was suspended due to the lack of contribution from Brazil to the mechanism.

Initially, Brazil had the right to use US$ 100 million under Focem. However, some projects have already consumed resources from this “current account”, leaving a remaining balance equivalent to R$ 350 million.

The government of former president Jair Bolsonaro (PL) stopped paying contributions to international organizations such as the OAS (Organization of American States), Unesco (UN body for Education and Culture) and the Brics bank. Because of this, Brazil ran the risk of losing the right to vote in some discussions within the UN, in particular at a time when the country occupies one of the rotating seats on the Security Council, the highest collegiate of the body.

Since the beginning of the third term of the Lula government, the country has already settled R$ 910 million in debts with international organizations – in this year’s Budget, there is a forecast for payment of R$ 2.9 billion and an amount to be paid of R$ 2. 7 billion inherited from previous administrations. The government’s intention is to settle the debts this year.

So far, contributions have been paid to the IAEA (International Atomic Energy Agency), Aladi (Latin American Integration Association), the Secretariat and Parliament of Mercosur, the CPLP (Community of Portuguese Speaking Countries), the WHO (Organisation World Health Organization), the ILO (International Labor Organization) and the WTO (World Trade Organization), among other bodies.