Under the government's budget plans - which still need to be approved by Congress - the Environment Ministry will lose almost half the funds it has been allocated for 1999.

Even before the latest austerity drive, the fate of the rain forest was giving renewed cause for concern.

Official figures released at the beginning of the year showed that between 1995 and 1997 an area of forest twice the size of Belgium was burnt or cut down.

Environmentalists are particularly concerned about a proposal to cut a pilot programme for protecting Brazilian rainforests from $60m to a mere $6m.

The programme was set up as a channel for foreign donor funding after the Earth Summit in 1992.

The environmentalist organisation Friends of the Earth has described budget cuts as absurd, since they appear to suggest that the authorities will accept no more foreign aid for the programme.

Accounting trick may backfire

According to Friends of the Earth, by including foreign donations among its spending cuts the Environment Ministry is using an accounting trick to meet its financial targets.

Campaigners fear however that the resulting damage will be real.

They are now lobbying hard to have the cut reversed.

The proposed cuts form part of a $23bn fiscal package designed to restore confidence in the country's battered economy.

Under the Brazilian constitution, the federal government has only limited room for manoeuvre when it comes to spending cuts.

BBC Brazil correspondent Stephen Cviic says the harsh cuts suffered by the Environment Ministry can be attributed to the high degree of protection given to civil servants, and the government's reluctance to cut the health and education budgets.