At the expiration of the 1998 IMF standby agreement in September 2001, two other one-year standbys were put in place with credit lines totaling about $30 billion. In 2002, debt service payments were running at over 80% of exports (a debt service ratio of 80.3%) as export markets continued slow after the 11 September 2001 terrorist attacks on the United States, and, as investors became increasingly anxious about the economic consequences of a Lula victory in the October presidential election. There were also questions about whether the US government's Bush administration would support another standby arrangement with the IMF for Brazil. On 6 September 2002 the expiring 2001 arrangements were replaced by two more one-year standby arrangements with a $30 billion line of credit just as the currency exchange rate and the Brazilian stock market index—the Bovespa index—were reaching historic lows. Both the exchange rate and the Bovespa index improved after the election and into the first quarter 2003; the improvements were in part because the sell-off had preceded the election and in part because the Lula government was proving less radical that had been feared. In February 2003, the government announced its target for a primary fiscal surplus (that is, the surplus before interest payments are made to service debts) at 4.25%, higher than the3.75% agreed to with the IMF. Overall, real GDP is estimated to have grown 1.5% in 2002, while inflation increased to 8.4%, up from 6.8% in 2001.
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