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Brazil agrees steps to cut deficit

Thursday 04 February 1999 19:02 EST
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BRAZIL AGREED to new steps to narrow the budget deficit and muffle inflation to ensure that $41.5bn in aid arranged by the International Monetary Fund keeps flowing. Three days of 12-hour-a-day negotiations involving the IMF and Brazil's top officials yielded an inflation target of below 10 per cent, agreement to use interest rates as the main tool to keep a lid on prices and setting fixed terms for the central bank chief.

The new spending cuts would narrow a projected 73 billion real deficit by as much as 9 billion reals (pounds 3.1bn), increasing the budget surplus before interest payments to up to 3.5 per cent of gross domestic product from 2.6 per cent.

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