Brazilian Opposition Warns Of Economic Chaos
Dow Jones Newswires
SAO PAULO (AP)--The two leading opposition presidential candidates
in Brazil's Oct. 4 elections Monday warned of impending economic chaos
in Latin America's largest country.
Luiz Inacio Lula da Silva of the leftist Worker's Party and Ciro Gomes of
the left-of-center Popular Socialist Party made their remarks at a joint
press conference held to complain of what they said was the "slanted press
coverage" of their campaigns.
Gomes, a former finance minister, said Brazil's current economic
stabilization policy would "at best result in a severe recession in 1999 and
at worst, a complete economic breakdown."
Lula said Brazil had become excessively dependent on speculative capital
"to the extent that we are now at the mercy of the good will of the U.S.
government and the International Monetary Fund, which has lost all of its
credibility."
He said that Korea, Indonesia, Thailand and Russia "recently submitted
themselves to IMF-imposed austerity measures, and all have gone
bankrupt."
"And Brazil is headed in the same direction," he added.
The two candidates said President Fernando Henrique Cardoso, who is
expected to win his bid for reelection, was preparing a post-election
package of austerity measures that would "stifle economic growth."
Like other emerging markets, Brazil has been buffeted by the turmoil in
world financial markets with a loss of investor confidence and a strong
outflow of capital.
To prevent a collapse of Brazil's currency, the real, and stem capital flight,
the government on Sept. 10 raised interest rates from 30% to 50%.
Last week, Cardoso tried to reassure international investors and prepare
Brazilians for belt-tightening economic measures that heightened fears of
recession and unemployment.
He hinted strongly that taxes would be increased in an effort to tackle a
budget deficit of more than 7% of gross domestic product.
Before the interest rate rise, Brazil needed 63 billion reals (BRR)
($1=BRR1.18) to finance its internal debt, Gomes said.
"Now it needs BRR80 billion, bringing us dangerously close to 8% of
GDP. This spells economic chaos," he said.
Recent polls give Cardoso about 47% of the vote, compared to 24% for
his nearest rival, Lula. Gomes trails in third place with about 10%. |
