-Caveat Lector- BBC News Online: Business: The Economy ------------------------------------------------------------------------ Thursday, February 4, 1999 Published at 23:44 GMT IMF reaches deal with Brazil <Picture> IMF reaches deal with Brazil The International Monetary Fund has reached agreement with Brazil on a new economic reform plan for 1999, paving the way for the release of $9bn in additional financial support. The IMF's deputy managing director, Stanley Fischer, spoke of his confidence in the deal before leaving for Washington. "I get a much better feeling having had these conversations, having agreed this framework .. than I did from just reading the reports," he said. <Picture: [ image: width=150]> Mr. Fischer said he hoped the accord could be signed "reasonably soon," probably within the next week or two. Brazil's Finance Minister Pedro Malan said that Brazil had agreed to tougher targets for public spending, including a primary surplus (before interest payments) of 3-3.5% of GDP, up from the 2.6% previously agreed. That could mean even more tax hikes, and spending cuts, as Brazil revises its budget plans. The government also said it was pledging with the Central Bank to keep inflation in "middle single digits" during the year, and it would give the Bank more independence. Brazil's collapsing currency, the real, has boosted the cost of imports, leading to fears that inflation will return. Markets recover The Brazilian stock market recovered on the news, turning a loss of 3% into a much smaller loss. The currency, the real also strengthened, after trading as low as 1.83 to the dollar earlier in the day. It has fallen by 30-40% since the government allowed it to float. <Picture: [ image: width=150]> Brazil was forced to devalue its currency three weeks ago after billions of dollars of foreign currency fled the country, despite a prior arrangement with the IMF for a $41bn support package. That made the targets in the previous deal impossible to meet, necessitating this week's renegotiations. Brazil's economy is still in trouble, as the high interest rates - nearly 40% - needed to defend the currency could well send the economy into a deep recession. Earlier in the week Brazil replaced its Central Bank chief with Arminio Fraga, a former aide to international financier George Soros, in an attempt to reassure the markets. ------------------------------------------------------------------------ <Picture>Business Contents <Picture><Picture> - London Shares<Picture> - The Markets<Picture> - The Economy<Picture> - The Company File<Picture> - Your Money<Picture> - Foreign Exchange<Picture>The Economy Contents <Picture><Picture><Picture> - <Picture> Economy Reports <Picture><Picture> - <Picture> Interest Rates ------------------------------------------------------------------------ Business Contents �London Shares �The Markets �The Economy �The Company File �Your Money �Foreign Exchange The Economy Contents �Economy Reports �Interest Rates Relevant Stories Soros aide to head Brazil's central bank (02 Feb 99 | The Economy) Brazil gripped by currency fears (01 Feb 99 | The Economy) Brazil - a catastrophe in the making? (22 Jan 99 | The Economy) Brazil backs vital reforms (21 Jan 99 | The Economy) Latin America holds its breath (15 Jan 99 | The Economy) Crisis talks on Brazil meltdown (15 Jan 99 | The Economy) Brazil pushes markets to the edge (13 Jan 99 | The Economy) Brazil quarrels over debt repayments (08 Jan 99 | The Economy) Brazil default sparks sell-off (08 Jan 99 | The Economy) In this section High-tech sell-off leads Wall Street down IMF reaches deal with Brazil UK rates fall again ECB keeps rates on hold Inquiry into online trading Fed leaves rates on hold Retailers' hopes in UK dashed Bank gets 'three cheers' Glimmer of hope in service sector UK nearly euro-ready, but... Byers under fire over 'wealth creation' Worst is over, says George Euro on top �112m boost for long-term jobless (From UK Politics) CBI calls for stability Budget New Year rally in house prices Jobs threat as engineer collapses Farmers face credibility gap Schr�der attacks speculators Free ISP offers talking email (From Sci/Tech) US budget surplus beckons Challenge to free Web access Manufacturing doldrums Job losses nationwide UK oil industry faces hard times 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. 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