BUENOS AIRES — The International Monetary Fund agreed Wednesday to its largest bailout ever, a $30-billion loan to Brazil that comes amid growing social unrest and political upheaval in South America.
The announcement came at the end of a three-nation tour of the continent by U.S. Treasury Secretary Paul H. O'Neill. The visit coincided with a major shift in U.S. policy, with the Bush administration showing increased willingness to rescue the region's troubled economies.
O'Neill's trip, which ended here Wednesday, also saw $1.5 billion in bailout funding for Uruguay and a U.S. promise to help speed assistance to Argentina.
"Brazil is on a solid long-term policy trend which strongly deserves the support of the international community," IMF Managing Director Horst Koehler said in a statement.
The IMF loan may have tossed a lifeline to the moribund candidacy of ruling-party candidate Jose Serra, the choice of the international investment community. The decision comes just two months before a hotly contested presidential election in which polls show Serra running a distant third to two left-leaning challengers.
A statement from Brazil's Economy Ministry said the government "is convinced that the [IMF] accord will serve the national interest and hopes the accord will be supported by the leading presidential candidates."
Serra praised the agreement, saying "it increases our future economic security." But the front-runners in the election--both strong critics of U.S. foreign policy--remained silent.
The United States is the IMF's largest donor and would have had an important say in the negotiations over the loan.
The IMF agreement also came amid growing concerns about political instability spreading through a region racked by deepening recession. In recent weeks, violent protests have hit Uruguay, Peru and Paraguay. In Bolivia, the radical left made dramatic gains in June elections.
Nowhere has the economic crisis frayed the social fabric as much as in Argentina, where nearly a quarter of the work force is unemployed, according to official figures.
O'Neill's visit to Buenos Aires on Wednesday was perhaps the most tense of his trip, with thousands of protesters gathering there for anti-U.S. demonstrations.
For one day, all Argentina hung on the lisping speech of the white-haired American in a charcoal suit, the highest-ranking Bush administration official to visit their country since it suffered a calamitous financial collapse late last year.
