WSJ: President Cardoso to gain new political 'momentum'
São Paulo, 16 - The US-based newspaper, The Wall Street Journal, wrote today
that market participants were hoping that President Fernando Henrique Cardoso,
recently elected to a second term, "can transfer the momentum from the international
agreement to the domestic political front".
According to the Wall Street Journal, it is not as yet clear whether the international
community's US$41.5bn rescue plan for Brazil will succeed or fail to calm financial
markets. "Investors will ultimately judge the plan on its ability to force down Brazilian
interest rates, strengthen the national currency and boost the country's stock of
foreign exchange."
Domestic market's immediate reaction, the newspaper wrote, showed global financial
markets relieved but not overwhelmed. "The market's ambivalent reaction reflects
Brazil's lingering credibility problem, exacerbated by the failure to fully implement last
year's budget-deficit reduction plan." For the newspaper, the country's fragmented
Congress must still ratify fiscal measures in the new package, which are linked to the
IMF-led aid, "and many investors may stay on the sidelines until they see the cuts in
place."
However, Treasury Secretary Robert Rubin said, it was confident in the success of
the financial rescue package for Brazil. "This should do it," he said. "Not only is Brazil
in and of itself very important, but adverse developments in Brazil could affect other
parts of Latin America."
In another story, the newspaper went further saying that Brazil's "belt-tightening"
austerity package, according to a congressional report released Sunday, "will
drastically affect several government social programs."
The study, the newspaper says, shows that the most affected programs include
"low-income housing, agrarian reform and projects to alleviate the drought-stricken
northeast and increase the minimum wage." The story also pointed out that about 25
million of Brazil's 160 million inhabitants live in extreme poverty. (By Fabio Pagotto,
Cynthia Decloedt and Paulo R. Monteiro Dias) |
