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To: PaulM who wrote (27427)	1/31/1999 9:00:00 PM
From: goldsnow	Respond to of 116762

Business: The Economy Brazil seeks to save real Brazilians have been rushing to withdraw from their savings accounts Crucial talks aimed at preventing the collapse of Brazil's plummeting currency have begun in the capital Brasilia. The International Monetary Fund (IMF) and the Brazilian authorities intend to thrash out a plan to overcome the atmosphere of panic gripping the world's eighth-largest economy. Correspondents say the Brazilian Government will be keen to persuade the IMF to release a further instalment of a $41bn loan agreed last year. Brazil spent the first instalment of the loan package in a futile attempt to defend the real - devalued two and a half weeks ago. There is increasing concern among Brazilians that the government may use shock tactics such as the confiscation of savings accounts or the declaration of a moratorium on debt payments - measures which were denied on Friday by President Fernando Henrique Cardoso. However there was widespread dismay on Sunday at the announcement that fuel prices are to rise on Monday by 3.5%. Brazil will do 'whatever is necessary' Speaking to journalists at the start of the negotiations, a senior Brazilian Finance Ministry official, Pedro Parente, said the authorities would do whatever was necessary to deal with the crisis. But any measures taken would be within the normal realms of fiscal and monetary policy and there would be no resort to shock tactics such as a price freeze, said Mr Parente. The BBC Brazil Correspondent Stephen Cviic said these comments appear to suggest that the government is contemplating, among other things, a new round of spending cuts. The IMF mission, led by Teresa Ter-Minassian, the fund's assistant director for South America, will want to discuss two main issues. Whether or not the central bank should intervene to prop up the plummeting real, and if so how. What kind of progress Brazil is making on its pledge to get its public finances in order. The talks came as a senior IMF official told world finance ministers that the devaluation of the Brazilian currency had gone too far in the past two weeks but that it will strengthen if the government adopts a clear monetary policy to restore confidence in the country. At the World Economic Forum in Davos, the IMF's first deputy managing director Stanley Fischer said once a credible monetary policy is in place "the exchange overshooting will begin to reverse, (and) the currency will strengthen". Mr Fischer will himself be arriving in Brasilia for talks on Monday. Cardoso mistrusted For the first time since he came to power in 1995, President Cardoso is faced by a population much of which clearly distrusts his economic management, says our correspondent. Despite vigorous government denials, rumours of the government's drastic plans circulated over the weekend, and the ensuing panic sent the currency plunging below a key psychological barrier of two reals to the dollar. Our correspondent says that if Brazil is to have any chance of avoiding financial collapse, strong international support will be essential. news.bbc.co.uk