$41 Billion Support Package: Brazil and IMF Announce Successful Conclusion To Negotiations on Economic, Financial Program

• Pages: 353-358

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Brazil's program first and foremost addresses the chief source of its external vulnerability, namely its chronic public sector deficit, which the country is now tackling in a serious and sustainable manner.

The program combines a large up-front fiscal adjustment of over 3 percent of

Camdessus: The program addresses the chief source of Brazil's vulnerability.

GDP with reforms of social security, public administration, public expenditure management, tax policy, and revenue sharing that will confront head on the structural weaknesses that lie at the root of the public sector's financial difficulties. Within this framework of structural reforms, Brazil's three-year fiscal program targets primary surpluses of 2.6 percent of GDP in 1999, 2.8 percent in 2000, and 3 percent in 2001. The Brazilian authorities are also committed to further opening up the economy, ensuring firm monetary discipline and macroeconomic stability, and maintaining the current exchange rate regime.

The way is now open for the international community to provide financial support to Brazil that will enhance market confidence in the government's economic policies and help ensure the success of the country's program. Official creditors, multilateral and bilateral, will provide support totaling more than Page 358 $41 billion over the next three years, roughly $37 billion of which is available, if needed, in the next 12 months. I believe that the soundness of Brazil's program and the authorities' commitment to it, together with the strong support demonstrated by the official international community, provide the conditions for Brazil's private creditors now to act to help ensure its success.

I will be asking the IMF's Executive Board to support the program with a three-year Stand-By Arrangement, augmented in the first year by the Supplemental Reserve Facility (SRF), for a total amount of SDR 13.0...