Brazil has agreed to reduce public spending and impose other economic austerity measures sought by the International Monetary Fund as conditions for $6 billion in IMF credits. The IMF funding is a vital step in obtaining additional international loans from private banks to help finance Brazil's serious balance of payments deficit.
A statement from the Brazilian planning ministry issued late Thursday outlined six points of agreement, reached after eight hours of talks with the IMF team led by Horst Struckmeyer, head of the fund's Western Hemisphere section.
Brazil has agreed that its balance-of-payments deficit, which is expected to reach $14.5 billion this year, must be reduced to $7.9 billion in 1983. The statement said Brazil was expected to achieve "sustained economic growth in coming years," and that the plan for covering its deficits involved participation by major international banks as well as the IMF.
Brazil's anti-inflation policy will be aimed at reducing its current annual inflation rate of about 95 percent to 70 percent in 1983. The statement said controls on public-sector spending would be within "rigid norms of austerity," and that savings and oil-import-substitution programs would be boosted.
In the public sector, the government also is committed to adjusting its prices for steel and for electrical energy.
The statement said that the IMF team expects to complete its talks by the end of next week. Central Bank President Carlos Langoni was reported as saying that Brazil would expect to make its first withdrawal of $1.5 billion from the fund package in March. But the Planing Ministry statement did not touch on the key issue of salary controls or cutting back of subsidized rural credit.
Brazil allows for built-in cost-of-living increases in salaries, which have resulted in a marked reduction in the number of strikes. Ministers have stated repeatedly there are no plans to change the salary laws, but it is clear that the IMF team is calling for some alteration in line with falling productivity, and this has been a source of friction in negotiations. Economics Minister Ernane Galveas issued a statement denying that subsidized credits and salary controls had been discussed with the fund.