Brazil: A Fiscal Deep Freeze

A Fiscal Deep Freeze

Sunnily dubbed the "summer plan," the economic controls announced by the government of President Jose Sarney last week received a decidedly chilly reception. Designed to slash the country's 1,580% inflation rate and to attack the $66 billion national debt, the plan will freeze prices, abolish automatic wage hikes and devalue the Brazilian cruzado by 16.4% in relation to the dollar. The government will close six out of 27 ministries, and promises to fire 60,000 employees. Brazil is temporarily suspending any further debt-for- equity swaps with foreign banks and refuses to rule out a new moratorium on payments toward its $115 billion...

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