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To: John Hunt who wrote (17020)	11/6/1998 5:17:00 AM
From: John Hunt	Read Replies (1) \| Respond to of 18056

IMF, Brazil hammer out rescue plan to dodge crisis biz.yahoo.com << The International Monetary Fund and Brazilian negotiators on Thursday worked to complete a $30-billion-plus loan agreement to guard Latin America's biggest economy against an Asia-style meltdown. Brazilian Central Bank President Gustavo Franco was due to meet with IMF officials on Friday in hope of finishing a letter of intent underpinning the loan package. International monetary sources said an agreement could be announced after the talks or early next week. In a sign an accord was close, the Clinton administration has briefed some congressional staffers on negotiations. The United States is expected to contribute billions of dollars in bilateral aid by tapping into the U.S. Treasury Department's Exchange Stabilization Fund. Treasury Secretary Robert Rubin can tap into the fund without congressional approval, but he risks a backlash from lawmakers who want a say in its use. The IMF was expected to offer $15 billion to Brazil. The World Bank is preparing a series of loans worth $4.5 billion. Its executive board was briefed earlier this week by staff on the package. The Inter-American Development Bank stood ready with $3.4 billion. Brazil needs international support to stave off fears of a devaluation of its currency, the real, and to reassure anxious foreign investors. Collapse of the real could cause financial havoc in the rest of Latin America. Negotiations with the IMF reached a final stage after the government announced a tough austerity plan to save $84 billion over the next three years. Brazilian officials hope the austerity drive will go a long way to restoring investor confidence and that the government will not need to draw on much of the international package. In addition to upfront loans, the IMF was expected to offer Brazil a special credit line proposed by Group of Seven (G7) major industrial nations. The precautionary line of credit could be tapped at times of acute financial stress, ensuring the government pays its bills on time and has enough cash to defend its currency. The World Bank and the Inter-American Development Bank will also use new emergency loan facilities to help Brazil. The credits will be disbursed more quickly than normal loans, but under shorter repayment terms and at higher interest rates. To supplement these loans, G7 nations were expected to offer bilateral aid to the government, as well as export-import financing to keep trade flowing. The U.S. Export-Import Bank plans to increase its financial support for Brazil by $2 billion, officials said. The Treasury was expected to tap the Exchange Stabilization Fund, but it was unclear how much money Washington would offer. Use of the special Treasury fund has raised hackles in Congress in the past, and many lawmakers resent that Rubin can tap into the fund without a green light from Congress. Congress' Joint Economic Committee said in a statement that lawmakers should consider eliminating the ESF, or require greater oversight. The Treasury Department has briefed House Banking Committee staff on conditions in Brazil, along with others that have requested information about the upcoming package, congressional sources said. Japan's Finance Minister Kiichi Miyazawa said on Wednesday that Tokyo was also likely to provide aid to Brazil on a bilateral basis. No figures were given. >> Gee, thanks guys!