Chronology of events leading to Brazil-IMF deal
Reuters, Friday, November 13, 1998 at 16:34
BRASILIA, Nov 13 (Reuters) - Here is a chronology of events
leading up to Friday's announcement by the International
Monetary Fund of a $41 billion-plus package for Brazil to help
Latin America's largest economy survive global financial
turmoil:
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JULY 1997 - Thailand devalues its baht currency, marking the
effective start of a major financial crisis in Asia that also
undermines investor confidence in Latin America.
AUGUST 1997 - Thailand is thrown a lifeline by the
International Monetary Fund in the form of a $17 billion rescue
package.
OCTOBER 1997 - Brazilian markets are battered as Asia's crisis
deepens, threatening the country's inflation-slashing Real Plan
introduced in 1994. Brazil raises interest rates to 42 percent
to stop dollars leaving the country and ward off a devaluation.
OCT. 31, 1997 - IMF announces rescue package for Indonesia of
around $42 billion which failed to restore confidence in the
country.
NOVEMBER 1997 - Brazil promises $18 billion in tax increases
and spending cuts to ease investor concerns about its budget
deficit. But most of the cuts are not implemented.
DEC. 4, 1997 - IMF approves $21 billion loan for South Korea as
part of a $58 billion bailout package. Within weeks the fund
pledges to rush forward $10 billion in loans to stop
near-default in South Korean banking system.
JULY 20, 1998 - The IMF approved an $11.2 billion loan for
Russia as part of a $22.4 billion package from international
lenders.
AUG. 17, 1998 - Russia devalues the rouble and halts foreign
debt payments, sending world financial markets into chaos.
Brazilian share and debt prices slump and dollars start pouring
out of the country.
SEPT. 11 - Brazil resorts to another interest rate hike to
nearly 50 percent a year in a desperate bid to check dollar
outflows of more than $2 billion a day.
SEPT. 15 - As more dollars flow out of the country and foreign
currency reserves tumble, Brazil announces it is talking with
the IMF.
OCT. 4 - Cardoso is reelected Brazilian president, having
pledged austerity measures to save the economy.
OCT. 20 - Brazil and the IMF agree on spending targets for the
next three years to bring Brazil's budget deficit until
control.
OCT. 28 - Brazil unveils a plan to save $84 billion by 2001
through tax increases, budget cuts and other measures. The plan
paves the way for an international credit plan led by the IMF.
NOV. 4 - The lower house of Congress finally approves a
long-delayed social security reform bill, a key part of the
austerity plan. Shares rise on hopes the government will get
the rest of the plan through Congress and dollar outflows slow.
NOV. 13 - The IMF, the World Bank, the Inter-American
Development Bank and leading industrial nations announce a
package for Brazil worth more than $41 billion to prevent an
Asia-style financial meltdown.
Copyright 1998, Reuters News Service
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