Brazil is being given a record $30.4bn (�19.5bn) loan to try to shore up confidence in its economy.

The loan was formally approved by the International Monetary Fund (IMF) on Friday, although it was first outlined last month.

The country is on the verge of a presidential election and there are fears that if the leftist candidate wins, Brazil could default on its $250bn debt.

The IMF said that about $3bn of the cash would be available immediately with a further $3bn available by the end of the year, after a review.

The rest of the loan will be given in four payments over 2003, providing the Brazilian government maintains sound economic policies.

Targets must be met

The IMF usually tries to avoid lending large sums of money to governments so close to elections.

But because Brazil's position has been looking more and more tenuous the IMF decided the loan was necessary.

In return for the money the new government will have to maintain a 3.75% budget surplus.

If that target is not met, the loan could be cut off.

The IMF's decision to provide the largest loan in its history to support Brazil came after the US administration modified its opposition to large rescue packages for countries in financial crisis.