Brazil's Malan sees Congress voting fiscal reforms
Reuters, Sunday, January 17, 1999 at 19:32
BRASILIA, Jan 17 (Reuters) - Brazilian Finance Minister
Pedro Malan said in an interview published on Sunday that it
was not true Congress was preventing urgent fiscal reforms from
being approved, and that a crucial vote would take place this
week.
Malan also told Epoca news magazine some of the terms of a
$41.5 billion bailout led by the International Monetary Fund
and the U.S. Treasury would have to be reviewed following the
devaluation of the real currency, "but not the fiscal part."
Epoca did not make clear whether it spoke to Malan before
or after Friday's free-float of the real, once the proud
linchpin of an economic stabilization plan that ended soaring
inflation. Most of Malan's comments appeared to refer to last
Wednesday's attempt at a controlled 8 percent devaluation.
"People always say the fiscal stabilization program isn't
working. Many analysts say Congress isn't responding to the
program. That's not correct; it's not true," Malan said.
Investor patience with the world's eighth biggest economy
ran out this month because of a series of indications that
Brazil was having insurmountable trouble trying to narrow its 8
percent of gross domestic product public sector deficit.
In December, Congress rejected a law that would have
increased pension contributions from civil servants and levied
pension contributions on retired civil servants. That blow was
followed this month by a unilateral debt moratorium by Minas
Gerais state on debt owed to the federal government.
Malan said the amount of money involved was negligible but
the use of the word moratorium spooked traders. "It's an
instinctive reaction for a trader," he said.
Malan said the pension contribution proposal would be put
to a new vote in Congress this week after government allies
reached an accord on the measure.
He also noted that 18 of Brazil's 27 state governors had
declared they would not default on their debt to Brasilia.
In addition, concerns that a special tax on financial
transactions, known as the CPMF or check tax, would not start
to be collected for several months should be removed by
proposals to fill the income gap with funds from elsewhere.
Malan traveled to Washington over the weekend for talks
with IMF and U.S. Treasury officials and said he might try and
get Brazil's international backers to speed up a second
disbursement of cash.
Copyright 1999, Reuters News Service |
