Brazil austerity coming soon

[Robert Weissman <rob@essential.org>]

> Copyright 1998 Chicago Tribune Company   
>                                 Chicago Tribune 
> 
>             November 9, 1998 Monday, NORTH SPORTS FINAL EDITION 
> 
> SECTION: NEWS; Pg. 4; ZONE: N 
> 
> HEADLINE: COMBINATION LOAN TO BRAZIL ALMOST READY; 
> IMF, GROUP OF NATIONS JOIN FORCES FOR BAILOUT 
> 
> BYLINE: Reuters. 
> 
> DATELINE: WASHINGTON 
> 
> BODY: 
>    The International Monetary Fund and the world's richest nations on 
Sunday 
> put final touches on
> a multibillion-dollar rescue package for crisis-hit Brazil in hope of 
> averting an Asia-style financial
> meltdown in Latin America. 
> 
> Monetary sources said negotiators for the IMF and the Brazilian 
government, 
> meeting in
> Washington, made progress in weekend talks on a letter of intent, laying 
out 
> the country's policy
> commitments. Final agreement on the document -- expected Monday or Tuesday 

> -- would clear the
> way for more than $22 billion in loans from the IMF, the World Bank and 
the 
> Inter-American
> Development Bank. 
> 
> Parallel negotiations were under way in Switzerland with the Bank for 
> International Settlements
> (BIS), which is coordinating billions of dollars in bilateral assistance 
> from Group of Seven major
> industrial nations and other states eager to shore up Latin America's 
> biggest economy. The BIS
> serves as central bank to the world's central banks. 
> 
> Estimates of the size of Brazil's rescue package -- including bilateral 
aid 
> -- run from $30 billion to as
> much as $45 billion. IMF Managing Director Michel Camdessus said the loan 
> program would have
> "all the potential to avoid a major crisis in (Brazil) and put it 
> potentially on a sustainable track of
> recovery." 
> 
> The Brazil package would be one of the largest arranged by the IMF. Last 
> year, in response to
> Asia's financial crisis, the Washington-based lending agency put together 
a 
> $58 billion package for
> South Korea, a $42 billion-plus deal for Indonesia and a $17 billion loan 
> for Thailand. In July, the
> IMF arranged a $23 billion package for Russia. 
> 
> Leaders representing 10 central banks were due to meet Monday at the BIS 
in 
> Basel, Switzerland.
> Brazilian Central Bank President Gustavo Franco, who held talks Friday and 

> Saturday with IMF
> and U.S. Treasury officials in Washington, was headed for Switzerland on 
> Sunday. 
> 
> Brazil needs international support to stave off a devaluation of its 
> currency, the real, and to reassure
> panic-stricken investors. A collapse of the real could cause financial 
havoc 
> in the rest of Latin
> America. 
> 
> Negotiations with the IMF reached a final stage after the Brazilian 
> government announced a tough
> austerity plan to save $84 billion over the next three years. Brazilian 
> officials hope that the austerity
> drive will go a long way to restoring confidence and that the government 
> will not need to draw on
> much of the international package. 
> 
> "We need a volume of funds that would dissipate any sort of doubt that is 
> currently put against
> Brazil, although we may not need to use the money," said Pedro Parente, 
> executive secretary at
> Brazil's Finance Ministry. 
> 
> 2-
> 
> 
> Copyright 1998 AFP-Extel News Limited   
>                                   AFX News 
> 
>                    November 9, 1998, Monday - 09:55 Eastern Time 
> 
> SECTION: Government; Government Changes, Cabinet Lists; Economic News; 
> Macroeconomic
> Stories; Economic News; Foreign Debt 
> 
> LENGTH: 159 words 
> 
> HEADLINE: Brazil aid talks nearing end, deal may come tomorrow - source 
> close to talks 
> 
> BODY: 
>     WASHINGTON (AFX) - Negotiators for the Brazilian government, the IMF, 
> other  
> international agencies and the G10 are putting the final touches on a  
> multi-billion dollar aid package for Brazil, and a deal could be announced 

> as  
> early as tomorrow, said a source close to the talks.  
>     The source said the deal is almost certain to be announced this week, 
> but  
> that tomorrow is the earliest possibility.  
>     While he could not quantify the exact amount of aid that will be  
> forthcoming, he said speculation of 15 bln usd from the IMF, 4.5 bln from 
> the  
> World Bank and 3.4 bln from the Inter-American Development Bank is close 
to 
> the  
> mark.  
>     Funds from individual countries would be also added to that 22.9 bln 
usd 
>  
> total.  
>     Speculation on the total size of the package has centered in recent 
days 
> on  
> a figure of 30 bln usd, but some people have put the figure as high as 45 
> bln.  
>     al/jlw 
>