Brazil's Cardoso assures country will honor debt
Reuters, Tuesday, January 12, 1999 at 10:29
RIO DE JANEIRO, Jan 12 (Reuters) - Brazilian President
Fernando Henrique Cardoso said Tuesday that Brazil will honor
its debts in a bid to calm investors after a leading state
declared a moratorium last week on its debt with the central
government.
"The market can calm down, the government knows what it's
doing, what it's going to do," Cardoso told reporters during a
visit to Rio de Janeiro. "We will pay our debts, all will honor
their debts."
Itamar Franco, governor of Brazil's third-biggest state of
Minas Gerais, said last week that he will cease to make
payments over the next three months on the $13.4 billion the
state owes the federal government.
Cardoso told reporters Tuesday that state budget problems
were due to bloated payrolls and pension systems and urged
cash-strapped states to adjust their budgets.
"States that have problems now have to adjust," Cardoso
said. "Many states' problems are excess of personnel, often
pensioners, that doesn't have anything to do with renegotiating
debt with the federal government."
Cardoso warned that the federal government already did its
part by cutting interest rates on states' debt payments.
He also said that Pedro Malan will remain as Finance
Minister, squelching market speculation that Malan could be on
his way out of the ministry.
"Minister Malan is essential for Brazil," he said. "He has
enormous skill."
Copyright 1999, Reuters News Service
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