Brazil Officials Anticipate External Creditor Status By Jan

BRASILIA (Dow Jones)--Top Brazilian economic officials late Thursday celebrated the likelihood of reaching external creditor status by January, as signaled for the first time ever by the central bank in a special report on sustainability released earlier in the day.

The bank, in a report entitled "Indicators of Brazil's External Sustainability - Recent Evolution," said the country will likely have become an external creditor for the first time ever in January by an amount of $4 billion and gain a strong buffer against adverse overseas events for the economy in the year ahead.

In a statement released after market close, Brazil's central bank president Henrique Meirelles said the achievement was of historic significance for the Brazilian economy.

"The significant improvement in the several indicators of Brazil's external sustainability is an important landmark in our history," he said. "This improvement means that we are gradually overcoming a long period characterized by vulnerability and crises, caused mainly by difficulties in honoring the country's external liabilities."

Brazil defaulted on its on its external obligations in 1987 and was forced to restructure its debt under the U.S. backed "Brady Bond" program.

After going on austere fiscal and monetary programming from the 1990s, the country has since been able to retire its Brady debt and pay off a series of obligations with multilateral lenders such as the International Monetary Fund, thus vastly improving its investment profile and foreign currency inflows.

Meirelles Thursday credited the country's stronger international position particularly to sound economic policies based on fiscal responsibility, a floating exchange rate, and the establishment of inflation targets.

"This tripod has assured a gradual improvement of our fiscal and external fundamentals, which increases the economy's resistance to adverse shocks," he said.

Also commenting on the central bank sustainability report Thursday, Finance Minister Guido Mantega said the country's status as an external creditor would pave the way for its elevation to investment grade in the near future.

"In 2008, we will already achieve investment grade," he said.

Brazil's sovereign credit rating is set at Ba1 by Moody's and double-B-plus by Standard and Poor's and Fitch Ratings, all just one step below investment grade.

Meanwhile, Mantega Thursday said the country would continue a policy of building foreign reserves in its effort to fortify external sustainability.