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To: Thomas M. who wrote (9582)	10/27/1998 9:10:00 PM
From: Cynic 2005	Respond to of 86076

Cardoso Outlines First Details Of Brazil's Austerity Package Dow Jones Newswires SAO PAULO -- In the first official word on Brazil's fiscal austerity plans, President Fernando Henrique Cardoso said Tuesday that the country will cut 8.7 billion reals ($7.31 billion) from its 1999 budget. The steps are seen as a way to shore up investor confidence and make the country more eligible for an aid package from the International Monetary Fund. In a brief televised address, Mr. Cardoso said that the cuts are "without precedence" and reflect the government's determination to achieve "fiscal balance" in as short a period as possible. "Most of the cuts and the revenue increases are temporary, to address an emergency situation," Mr. Cardoso said. "They will be suspended as soon as we manage to restore more balance in our accounts." <<Yeah, that's how all tax increases start>> Although he provided no numbers, the president said a financial-transaction tax will be raised and civil servants will be required to pay more into the pension system. The government will also raise revenues by increasing a social-security financing tax paid by companies. Markets in Latin America and the U.S. had experienced jitters on concerns about the fiscal-adjustment plan and rumors Brazil would devalue the real. The Brazilian central bank moved quickly to deny the rumors. Finance Minister Pedro Malan is scheduled to announce the details of the plan on Wednesday. The IMF and other international financial institutions have been in talks with Brazil about a financial assistance package. The measures are largely seen as the necessary precursor to an international relief package to boost Brazil's economy and stop economic turmoil from spreading to the rest of Latin America. The delay in setting out the package has sparked rumors that it will be larger than the $30 billion figure that has been kicked around. Although none of the measures are likely to be popular -- a major reason why Mr. Cardoso held off announcing the plan until after Sunday's runoff elections for governors in 13 states -- some economists think that the steps have more chance of passing then they did last year in the runup to an election. Despite the delay in revealing the austerity measures, opposition governors won in several key races. Because governors in Brazil often hold greater influence over congressmen from their states than the president does, Mr. Cardoso may still have some difficulty getting his measures through the congress. However, Mr. Cardoso faces heavy pressure to follow through on his promises to get Brazil's economy going again. "In the past, Brazil got so many waivers (about not meeting established goals) from the IMF that Cardoso really has to shore up confidence or in the country or people won't take it seriously anymore," said Walder de Gois, president of the Brazilian Institute of Political Studies.