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To: Lee who wrote (79877)	11/13/1998 12:26:00 PM
From: Mohan Marette	Read Replies (2) \| Respond to of 176387

Brazil/IMF close to a deal - Announcement may come as early as today. Hi Lee: Here is a bit of good news in case you didn't already know. ---------------------------------------------------------------- IMF's Monster Brazil Bailout Nears Completion 8.56 a.m. ET (1356 GMT) November 13, 1998 By Harry Dunphy WASHINGTON — The International Monetary Fund neared completion of a long-expected $42 billion rescue package for Brazil as financiers sought to stop the economic upheaval in Russia and Asia from spreading to Latin America. "This is not a done deal but we are close," an IMF official, speaking on condition of anonymity, said early today. The official could not confirm the exact amount of the bailout because negotiations were continuing. But he said $42 billion was close to the total amount of the three-year package needed by Latin America's largest economy. An announcement could come as early as today, possibly in both Washington and Brasilia, Brazil's capital. The IMF was expected to contribute between $15 billion and $18 billion to support Brazilian President Fernando Henrique Cardoso's austerity plan of tax increases and spending cuts aimed at saving $23.5 billion so he can avert a devaluation of the country's currency, the real. A devaluation could set off an economic meltdown in Latin America and worsen turmoil in other world markets including the United States. While the IMF's estimated share was known since early last month, the amount contributed by the United States and other wealthy nations was the subject of lengthy talks in Washington and Switzerland. The United States was expected to contribute about $5 billion from a Treasury Department fund originally established to protect the dollar. The United States used the fund to help Mexico in 1995 and South Korea and Indonesia last year. Contributions from the World Bank, the Inter-American Development Bank and the other wealthy nations — Japan, Canada and 11 European countries — would bring the final total to an estimated $42 billion. Still apparently unresolved was a Brazilian request for a credit, which would not require Brazil to use the full amount, instead of a loan, said officials involved in the talks. The conditions of a credit would give the IMF less control over Brazil's spending. For months, Brazil has been one of the most closely watched patients on the emerging markets sick list. After Asia's financial crisis last year and Russia's economic upheaval this summer triggered panic in global markets, international investors and bankers feared Brazil would be forced to devalue. The country's foreign exchange reserves have dropped from $65 billion to $47 billion as investors moved out their money. In an attempt to stem the flow, Cardoso's government raised interest rates to 50 percent. Cardoso won re-election in early October and then presented his belt-tightening proposals to parliament. The Brazil package would be among largest put together by the 182-nation IMF. Last year, in response to Asia's financial crisis, the Washington-based lending agency arranged a $58 billion package for South Korea, a $42 billion-plus deal for Indonesia and a $17 billion loan arrangement for Thailand. In August, the IMF established a $23 billion safety net for Russia that later was suspended after the Kremlin devalued the ruble and defaulted on government debt.