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To: Alex who wrote (21994)	10/20/1998 6:36:00 PM
From: goldsnow	Read Replies (2) \| Respond to of 116779

Brazilian President Weights Options Tuesday, 20 October 1998 S A O P A U L O , B R A Z I L (AP) PRESIDENT FERNANDO Henrique Cardoso is weighing a package of measures expected to slash government spending and raise taxes in an effort to halt the nation's growing economic turmoil. The Finance Ministry on Tuesday gave Cardoso a set of proposals aimed at curbing the government's ballooning budget deficit and bolstering the slumping economy, the world's ninth-largest. Finance Minister Pedro Malan discussed the measures with Cardoso and received "some instructions" from the president, his press office said without further elaboration. It was uncertain when the package would be announced. Brazil and the International Monetary Fund, meanwhile, moved closer to agreement on an expected $30 billion rescue package. A joint statement by the IMF and the Brazilian government said the two sides agreed Brazil should try to reduce its budget deficit from an expected 8 percent of gross domestic product to zero by 2000. The statement was issued after a weekend of talks between IMF officials and a Brazilian delegation headed by Pedro Parente, executive secretary of the Finance Ministry. The Brazilian economy has been buffeted by the world financial turbulence that began more than a year ago in Southeast Asia and has pushed a number of nations into recession. Western officials fear that if Brazil is badly damaged by the crisis, other nations in Latin America, and perhaps even the United States, will be hurt as well. Brazil's economy has been drained by a loss of capital as investors have lost confidence in emerging markets and pulled their money out of stocks, bonds and local currencies. Brazil's foreign reserves have fallen below $50 billion from $70 billion at the end of July. In an effort to prevent a collapse of the nation's currency, the real, and stem capital flight, interest rates have been pushed up to around 50 percent a year. Analysts expect the government to slash public spending by nearly $17 billion and raise money by increasing a tax on all financial transactions to 0.3 percent from 0.2 percent. Marcel Solimeo, chief economist of the Sao Paulo Chamber of Commerce, said increased taxes would "drain resources from the private sector and further aggravate the recessionary scenario, which is already in place." More taxes, he said, will "serve to reduce the country's economic output and as a consequence the government's tax revenue will drop."