TEXT-IMF statement on Brazil program
Reuters, Friday, November 13, 1998 at 15:53
WASHINGTON, Nov 13 (Reuters) - Following is the full text
of the International Monetary Fund's statement on its $41
billion-plus financial program for Brazil announced on Friday:
Camdessus welcomes conclusion of talks on Brazil's program
Michel Camdessus, managing director of the International
Monetary Fund (IMF), said today that he was pleased to announce
that "the Brazilian authorities and an IMF team have
successfully concluded negotiations on a strong three-year
program of economic and financial reform. Brazil's program
first and foremost addresses the chief source of its external
vulnerability, namely its chronic public sector deficit, which
the country is now tackling in a serious and sustainable
manner.
"The program combines a large up-front fiscal adjustment of
over three percent of GDP with reforms of social security,
public administration, public expenditure management, tax
policy and revenue sharing, that will confront head-on the
structural weaknesses that lie at the root of the public
sector's financial difficulties. Within this framework of
structural reforms, Brazil's three-year fiscal program targets
primary surpluses of 2.6 percent of GDP in 1999, 2.8 percent in
2000 and three percent in 2001. The Brazilian authorities are
also committed to further opening up the economy, ensuring firm
monetary discipline and macroeconomic stability, and
maintaining the current exchange rate regime.
"The way is now open for the international community to
provide financial support to Brazil that will enhance market
confidence in the government's economic policies and help
ensure the success of the country's program. Official
creditors, multilateral and bilateral, will provide support
totaling more than US $41 billion over the next three years,
roughly US $37 billion of which is available, if needed, in the
next 12 months. I believe that the soundness of Brazil's
program and the authorities' commitment to it, together with
the strong support demonstrated by the official international
community, provide the conditions for Brazil's private
creditors now to act to help ensure its success.
"I will be asking the IMF's Executive Board to support the
program with a three-year stand-by arrangement, augmented in
the first year by the Supplemental Reserve Facility, for a
total amount of SDR 13.0 billion, equivalent to about U.S. $18
billion. Around 70 percent of these funds will be under the
SRF, thus ensuring the early availability of a very significant
sum.
"Mr. (James) Wolfensohn, president of the World Bank, has
assured me of his readiness to recommend to his Board provision
of up to $4.5 billion in support of Brazil's program.
Similarly, Mr. (Enrique) Iglesias, president of the
Inter-American Development Bank (IDB), recommend to his Board
an IDB support package of US $4.5 billion.
"Brazil's program will also receive strong support from a
large number of industrial countries in North America, Europe
and Asia, whose governments or central banks will provide
through the Bank for International Settlements (BIS) additional
financing totaling approximately U.S. $14.5 billion.
"The recent passage by the Brazilian Congress of the social
security reform law is a significant and long-awaited
achievement. Together with the recent submission to the
Congress of a revised budget for 1999, in which every effort
has been made to spare basic social programs from the
expenditure cuts that fiscal discipline requires, this
reassures me that Brazil will implement the rest of its program
rigorously. And in turn, the success of Brazil's efforts will
greatly brighten the economic prospects of the region as a
whole," Camdessus said.
Copyright 1998, Reuters News Service |
