Brazil to strike IMF loan deal shortly - cenbank
Reuters, Friday, October 30, 1998 at 15:16
SAO PAULO, Oct 30 (Reuters) - Brazil is likely to secure a
loan package with the International Monetary Fund in the next
few days, Central Bank Director of International Affairs
Demosthenes Madureira de Pinho Neto said Friday.
"I think it is likely that in the next days we are going to
have something signed with the IMF," Pinho Neto told Reuters
Television in an exclusive interview.
A Brazilian delegation was heading to Washington Friday to
finalize an IMF-led loan seen as crucial to restoring investor
confidence in the country's battered economy.
The trip comes just two days after Brazil announced a tough
austerity plan to save $84 billion over the next three years,
which was considered a prerequisite to any aid.
Local newspapers estimated Friday an IMF-led loan could
total between $30 billion and $45 billion, including aid from
other agencies. But Pinho Neto said any values mentioned were
pure speculation at this stage.
"We haven't discussed this value with the IMF, we haven't
been precise about any size of package, so everything that is
in the market is only, I believe, market estimates, nothing
official that we have discussed with the IMF," he said.
Pinho Neto said obtaining the IMF loan was not as important
to Brazil as quickly pushing the fiscal measures through its
unruly Congress, where lawmakers have already started grumbling
about tax increases and other measures included in the plan.
Economists say Brazil must urgently tackle its nominal
budget deficit, close to 7 percent of gross domestic product,
to stave off fears of a devaluation in the real currency.
"The issue here is an issue of confidence," Pinho Neto
acknowledged. "If we play this confidence game well, correcting
our fundamentals and moving in the right direction, I don't
think the size of the package will make much of a difference."
He reiterated the government's view that any IMF-led credit
line would be a precautionary facility and Brazil would only
resort to borrowing from it in case of an emergency.
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