Brazil fine-tunes agreement with IMF - diplomat
Reuters, Monday, October 19, 1998 at 20:59
By Anthony Boadle
WASHINGTON, Oct 19 (Reuters) - Brazil is close to agreement
with the International Monetary Fund on the economic program it
must adopt to get a multibillion-dollar financial aid package,
diplomatic sources said on Monday.
A Brazilian government team led by Finance Ministry
Executive Secretary Pedro Parente huddled with IMF officials
over the the weekend to thrash out the figures of an austerity
plan. Meetings are expected to continue through Tuesday.
"They are discussing the technical details with Fund and
World Bank personnel, going over the numbers to see how Brazil
plans to implement the program," a Brazilian diplomat said.
"They are discussing, figure by figure, how to meet the
planned targets," he told Reuters.
"This means that the program is well advanced and that the
agreement with the IMF is about to be reached at any moment,"
the diplomat said.
The Brazilian team includes Finance Minister Pedro Malan's
top aide Amauri Bier and central bank director Alatamir Lopes.
The diplomat said they would stay in Washington until Tuesday
or Wednesday.
The fiscal austerity plan must be ready by Tuesday, the
deadline set by President Fernando Henrique Cardoso, although
the measures are not expected to be announced until next week
after second-round state elections are completed.
International monetary sources said they expected the IMF
to approve Brazil's program quickly and announce a financial
aid package backed by other multilateral institutions and
leading industrial nations.
The three-year economic program has been long awaited on
financial markets to gauge the resolve of the recently
reelected Cardoso to bring under control Brazil's bulging
budget deficit, which exceeds 7 percent of gross domestic
product.
The IMF-led financial aid package is meant to bolster
confidence in Brazil and stem an alarming flight of dollars
that has pushed a four-year economic recovery to the brink of
collapse since the Russian default in August.
More than $30 billion have left Brazil through its foreign
exchange markets since the beginning of August, dragging the
country's foreign reserves down to about $45 billion from $70
billion in the same period.
Brazil and the IMF have already agreed on an initial target
for a primary budget surplus (excluding debt service costs) in
the range of 2.5 to 3 percent of GDP in 1999.
Economists estimate the government will have to raise taxes
and cut spending by about $19.5 billion to meet that target.
Other measures, including long-delayed reforms of the civil
service, pension system and tax structure, require political
deals the government will need to strike with Congress.
Copyright 1998, Reuters News Service |
