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Brazil's Cardoso, Presidential Candidates Meet on IMF Loan - 2002-08-19

Brazilian President Fernando Henrique Cardoso has met with the four main presidential candidates to seek their commitment to the terms of a massive new loan from the International Monetary Fund. But the two leading candidates emerged from the talks without openly declaring their support for the loan.

One by one the four candidates met with President Cardoso and his top economic officials in Brasilia Monday, and were briefed on the new IMF loan and the current economic situation.

The $30 billion loan, aimed at stabilizing the economy, will be disbursed over the next 15 months, as long as Brazil continues to maintain a budget surplus, holds down inflation, and meets other IMF targets. The announcement of the loan, earlier this month, was designed to reassure nervous financial markets about Brazil's economic future. But market uncertainty over the outcome of October's presidential election and fears that Brazil may default on its debt have continued to drive down the value of Brazil's currency.

The meetings between Mr. Cardoso and the candidates were aimed at easing market concerns over the intentions of the presidential hopefuls toward the IMF accord. However, upon emerging from the talks, the two leading candidates reserved judgement.

Frontrunner Luiz Inacio "Lula" da Silva of the leftist Workers Party read a letter to reporters that he gave to the Brazilian leader, urging a series of measures to alleviate the economic situation. He repeated his commitment to honor contracts and keep inflation down, but made no reference to the IMF accord. Instead, Mr. da Silva made clear he will change Brazil's economic policies.

If we win the election," he said, "we will begin to change the economic policy from the very first day. This pledge is sacred."

Left-wing candidate Ciro Gomes, who is in second place in the polls, also expressed his commitment to honor all contracts and maintain a budget surplus. But Mr. Gomes said he will wait to issue a formal statement on the IMF loan.

"I asked the president to send me the official documents on the loan, he agreed and once I have a chance to study them I will issue a statement on my position on the accord," he said.

The other two candidates, Anthony Garotinho of a leftist opposition party, and Jose Serra of the government party were the last to meet with the Brazilian leader. Mr. Garotinho, who is in last place in the polls, openly denounced the IMF accord, saying it will impoverish Brazil and make it more dependent.

For his part, Mr. Serra praised the IMF agreement - calling it very positive for Brazil because it provides economic security without any additional sacrifice.

After the meetings ended, President Cardoso held a news conference in which he expressed satisfaction with the discussions. He said all the candidates expressed support for maintaining the budget surplus required by the IMF, and for honoring Brazil's contracts. Mr. Cardoso described the meetings as a sign of political maturity.

"I think the meetings showed maturity, political maturity, transparency and clarity," he said. "Here there were no cards hidden up the sleeve, instead there was the willingness to help Brazil."

With the meetings now over, Mr. Cardoso will send his top economic advisors abroad this week to reassure financial markets about Brazil's economic stability.