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IMF deal near for Brazil
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October 5, 1998: 11:19 a.m. ET
Cardoso's reelection should secure agreement for emergency funds
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NEW YORK (CNNfn) - Brazil appeared close to reaching an agreement with the International Monetary Fund to help bail the country out of its troubled economic situation as President Fernando Henrique Cardoso appeared headed for reelection Monday.
Cardoso was leading by more than 15 percent with more than half the ballots counted as of 10 a.m. Eastern time.
Cardoso's apparent victory was quickly applauded by the IMF, which is meeting in Washington to discuss global financial turmoil, including Brazil's economic troubles.
Brazil's Bovespa market, however, slid 5 percent to 6,084 points in mid-morning trading as the elections didn't prove enough to boost optimism in local markets, brokers said.
Cardoso is under heavy pressure to get Brazil's economic situation in order. With $30 billion having drained from Brazil's federal reserves since Russia's economic collapse in late August, and with the Sao Paulo stock market down more than 40 percent this year, the Brazilian government has been close to paralyzed by the approach of the election.
According to published reports, some government officials believe Cardoso could make an announcement this week regarding spending cuts of approximately $20 billion, or between 2 percent and 3 percent of the country's annual economic output.
IMF Chief Economist Michael Mussa said Brazil definitely will get IMF support, adding that the government must announce its economic program soon for the next year.
"They don't need to do it tomorrow, but they can't wait until the end of the year," Mussa said.
But Cardoso isn't expected to detail any restructuring plan before the gubernatorial runoffs Oct. 25 because such measures would require legislative approval.
Central bankers say deal is close
Brazil's Central Bank President Gustavo Franco and Bundesbank President Hans Tietmeyer also said the IMF soon hopes to have an overall plan to ensure stability in Brazil.
"We want to reach an overall concept in the foreseeable future," Tietmeyer told a news conference on the sidelines of the World Bank and IMF annual meetings.
Tietmeyer said three main things must occur for the IMF to implement the plan.
First, Brazil must present a credible program for its economy. Also, the issue of how the private sector can be involved must be resolved.
Finally, once the first two issues have been resolved, the IMF itself will decide on its contribution.
"The IMF is prepared for the time when there is a satisfactory program available, and that must include the involvement of the private sector," Tietmeyer said.
Franco ruled out any changes in Brazil's international exchange program as part of a new fiscal package. 
-- from staff and wire reports
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