RIO DE JANEIRO, JUNE 12 -- President Jose Sarney announced an emergency 90-day price freeze today in his latest attempt to curb inflation of more than 800 percent a year and to shore up Brazil's crumbling economy.
In a nationwide television and radio address, Sarney disclosed a series of austerity measures aimed at restricting public spending and decreasing the public deficit.
The government also is widely reported about to devalue the nation's currency, the cruzado, by 10 percent.
The measures were seen here as an attempt to appease foreign creditors concerned about Brazil's $110 billion foreign debt, the largest in the developing world. Brazil suspended interest payments Feb. 20 on its $68 billion debt to private foreign banks.
"I appeal to all workers, producers, professionals and politicians," Sarney said. "We are calling for a truce in this country. The country needs to pause to rebuild."
Brazil's leading industrialists predicted this week that this nation is headed for its worst recession in history.
The Sarney announcement also includes an end to the nation's automatic trigger for wages, which have in the past gone up 20 percent every time prices rose by that amount. A new formula will raise salaries every quarter based on average inflation in the three preceding months.
Sarney also announced the suspension of government projects such as the construction of railroads and port facilities, a nuclear reactor and hydroelectric and petrochemical projects. The total comes to some $33 billion in planned government expenses, according to local news reports.
"In this effort, no new project will be initiated," Sarney promised. "Current projects of absolute necessity will be completed. And social programs will suffer no cuts in any way."
Sarney spoke from the nation's capital, Brasilia, flanked by his Cabinet ministers, including his new finance minister, Luiz Carlos Bresser Pereira, who called the initiatives "the new cruzado plan."
Bresser Pereira replaced Dilson Funaro as finance minister on April 29 after Funaro stepped down in the wake of the collapse of the original cruzado anti-inflation plan. Funaro was considered the architect of that plan and the man most responsible for Brazil's debt moratorium.
"In this plan, we will use all that worked in the cruzado plan, while seeking to avoid all of its defects," Bresser Pereira said.
Today's announcements follow months of economic uncertainty on the part of the government over how to steer the economy, and they were greeted with caution by some.