RIO DE JANEIRO -- The International Monetary Fund has retracted
criticism of Brazil's anti-poverty plan in the wake of national indignation and calls for IMF representative Lorenzo Perez to be kicked out of the country.
Perez released a statement late Friday saying the government's explanation of the plan convinced him it would not endanger Brazil's ability to reduce its debt. Reducing the debt and a chronic budget deficit are parts of Brazil's 1998 agreement with the IMF for a $41.5-billion (U.S.) bailout loan.
On Thursday, Perez openly questioned the wisdom of the proposed 10-year
anti-poverty program, which would cost $2.3 billion a year. Most of the
money would come from the privatization of government property, which Brazil now uses to defray a huge domestic debt of about $294 billion.
''Brazil already spends a significant amount of money on social programs,'' Perez said in the first statement.
''This money has to be used more effectively.''
The statement managed to unite the political right and left in outrage.
Senate President Antonio Carlos Magalhaes of the rightist Liberal Front
party said it was ''undue meddling'' in the country's affairs.
Representative Jose Dirceu of the leftist Workers party urged the government send Perez home.
In the 1980s, when Brazil went broke and was bailed out by the IMF, many Brazilians blamed the Washington-based fund for the recession that ensued. IMF-bashing rallies were common.
Anti-IMF sentiment erupted again in 1991, when IMF economist Jose Fajgenbaum insisted structural reforms in the economy would require changing the constitution. Former Brazilian president Fernando Collor de Mello said Fajgenbaum should ''go reform his own house.''
- 194 World Financial Institutions