IMF promises aid package for Brazil

The world's finance ministers and central bankers have wrapped up five days of debate by promising a financial support package for Brazil, while work on other measures to tackle the international financial crisis are to continue. The Brazilian authorities and the International Monetary Fund have announced that a programme of budget reform for Latin America's biggest economy will be announced and the IMF has indicated that this will be supported by international funds. This is designed to restore order to Brazil's public finances and take some of the pressure off the country's currency - the real.

Investors fear the Brazilian economy could suffer an Asian style collapse, destabilising all of Latin America; the IMF and the government, led by President Cardoso, are aiming to restore confidence.

The IMF said it would be "in a position to react promptly" to support a Brazilian reform programme, which will aim to restore order to the public finances and stabilise its national debt. The IMF and the Brazilian government ruled out any devaluation of the real, while the World Bank also pledged to bring forward support for social programmes there to offset the impact of spending cuts.

Discussions will continue over the days ahead with the aim of reaching agreement soon on a detailed programme of fiscal and other macroeconomic and structural policies.

At the same time, IMF managing director Mr Michel Camdessus wrapped up the annual meeting of the IMF and the World Bank on a less than optimistic note. He talked of the world facing a "systemic crisis". Mr Camdessus also called for a higher level of international co-operation and a more durable international monetary system.

Meanwhile his counterpart at the World Bank, Mr James Wolfensohn, said that international ministers and central bankers had returned from Washington realising that the economic crisis was not just affecting a number of developing countries, but was "a crisis for everyone".

The IMF chairman and Austrian finance minister Mr Wolfgang Ruttenstorfer talked of the "most serious international economic crisis since the foundation of the IMF". The fund will now work to alleviate the immediate impact of the crisis and on restoring confidence, according to Mr Ruttenstorfer.

"We must continue to work to maintain and re-establish macroeconomic stability in crisis-stricken countries."

But he also placed a much greater emphasis than usual on the social dimensions of the crisis.

"Efforts to eradicate poverty, extend basic education and health care to the more vulnerable segments of the population are at the heart of any successful development strategy."