-Caveat Lector- Brazil, IMF in no rush to make next move After extending talks for a day, an IMF official split, leaving others to seal new financial targets for 2nd loan to Brazil. BY MARY MILLIKEN REUTERS SAO PAULO -- Brazil and the International Monetary Fund are sending signals that neither side wants to rush a fresh accord to restore stability after the tumultuous devaluation. Stanley Fischer, the IMF's first deputy managing director, left Brazil Thursday night, one day later than originally planned, after a fifth day of talks with Brazilian officials. But news of more money to stave off an economic collapse may not come for another week or more. The rest of the IMF mission will continue meeting with Brazil's economic team until the end of next week to seal new financial targets before the Latin American nation can draw a second $9 billion installment of a $41.5 billion credit line. They must also devise a system to intervene in the currency market and parameters for interest rates after Brazil was forced by the market to float its currency three weeks ago. "The work is naturally difficult because of the complexity of the Brazilian economy, the variables that have to be analyzed," IMF spokesman Francisco Baker told reporters Wednesday. President Fernando Henrique Cardoso said Wednesday after meeting with the IMF team that talks were progressing but it was not crucial that the IMF speed up the second disbursement. Mr. Fischer remained silent since arriving Monday night and was not expected to make any announcement before his departure. Brazil's leading financial daily Gazeta Mercantil reported that talks were strained by IMF demands that Brazil make more spending cuts and tax increases to offset the increase in debt with the devaluation and higher interest rates. The IMF had assembled the credit line with leading industrial countries in exchange for a three-year fiscal austerity plan to more than halve the budget deficit of 8% of gross domestic product. The prickly Congress has already approved spending cuts of 8.7 billion reals for 1999 and controversial tax increases. According to Gazeta, the government does not think it can ask Congress for more. The IMF is expected to recommend that Brazil maintain high interest rates as an essential way to restore confidence in its economy, the world's eighth- largest. But that policy is finding resistance in Brazil because of the burden it puts on debt servicing and an economy already headed for a contraction of around 5% this year. "With the size of the domestic debt and the uncertainties that exist in the international markets about moratorium risk, sky-high rates would only serve to increase insecurity rather than provide a solution," said influential economic commentator Celso Pinto in Wednesday's Folha de S. Paulo newspaper. Brazil has raised interest rates several times since it devalued the real in the middle of last month. The central bank held rates at 39% on Wednesday, up from 30% before the devaluation. O Estado de S. Paulo newspaper said in its top editorial Thursday that a fresh injection of IMF cash would allow the government to "finance in better conditions, exchanging expensive loans in reals for cheaper credits in dollars." "This highlights the importance of the release of resources in the IMF- coordinated program," Estado added. Smoother market conditions and an economic team refreshed with the appointment of new central bank chief Arminio Fraga Tuesday may give the negotiators extra time. Analysts said any signs of moves to curb currency volatility would help. "The possibility of central bank intervention in the forex market should result in stability or some further strengthening in the real in the short term," said Joseph Petry, chief economist for Latin America at Salomon Smith Barney, in a report. DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credeence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://home.ease.lsoft.com/archives/CTRL.html http:[EMAIL PROTECTED]/ ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
