Brazil officials deny seeking IMF target revision
Reuters, Wednesday, January 06, 1999 at 12:19
BRASILIA, Jan 6 (Reuters) - Brazil's top economic officials
dismissed a newspaper report that the country might seek to
alter an economic target agreed with the International Monetary
Fund in return for a multibillion-dollar credit rescue plan.
The Jornal do Brasil newspaper said Wednesday that some
government officials were considering asking the IMF for
permission to revise one target - for domestic net credit
supply - when fund officials assess Brazil's performance next
month.
Central Bank President Gustavo Franco said he had not read
the report but insisted Brazil, so far, was meeting the terms
of its agreement with the IMF.
"It's very early for something like this. The agreement is
being met perfectly," Franco said.
Finance Minister Pedro Malan, asked if Brazil might be
seeking a waiver, said: "Why? We are going to meet our fiscal
targets."
Under the terms of Brazil's agreement with the IMF,
domestic net credit is defined as the country's monetary base
minus net international reserves.
Jornal do Brasil said higher-than-expected dollar outflows
in December, when roughly $5 billion left foreign exchange
markets, had left net international reserves at $36.2 billion
at the end of the month.
That figure did not include about $9 billion in credit from
the rescue package already taken out by Brazil.
The low reserve level would oblige the Central Bank to stop
cutting emergency interest rates now at about 29 percent a year
and actually raise them again, Jornal do Brasil said.
The Brazilian government, seeking to head off a looming
recession, plans to keep on cutting rates gradually as progress
is made on a series of fiscal measures in Congress.
Lower rates are also essential if Brazil is to reduce its
debt servicing costs, the biggest factor behind its gaping
budget deficit of nearly 8 percent of gross domestic product.
The IMF led a $41 billion credit package offered to Brazil
in November to help Latin America's biggest economy survive
global financial turmoil while it implemented fiscal reform.
brasilia.newsroom@reuters.com))
Copyright 1999, Reuters News Service
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