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Tuesday, 10 September, 2002, 17:33 GMT 18:33 UK
Brazil reassures investors
Brazilian Finance Minister Pedro Malan
Malan says whoever wins will stick with the IMF
The outgoing Brazilian government has tried to reassure investors that leading presidential candidates in October's elections will stick to agreements with the International Monetary Fund (IMF).

Finance Minister Pedro Malan told an investors briefing in London that President Fernando Henrique Cardoso, who cannot constitutionally stand again, secured the pledges in late August.


We have come to a level of political maturity and economic rationality, which has been shown by many state (governments), some of which are run by the opposition parties

Pedro Malan
Finance Minister
"The agreement does three things, it reduces turbulence in the market, it ensures a civilised transition to a new administration and it contributes to the (financial) stability of the administration in its first year," he said.

The finance minister of Latin America's largest economy is taking part in a three day European roadshow to reassure investors that a victory by left-wing candidate Luiz Inacio Lula da Silva would neither reverse recent economic liberalisation nor result in a debt default.

"I don't not share the view that there would be a major turnaround if an opposition candidate wins the election," he said but added he would prefer if Mr Cardoso's anointed successor Jose Serra won.

Brazil's currency and stock markets weakened on Tuesday after several opinion polls showed the Mr Lula da Silva had widened his lead over the other candidates.

Election tactics

The latest polls suggested that Mr Lula da Silva had increased his lead to 39% while Mr Serra was in second place with 19%.

On Friday IMF managing director Horst Koehler praised Mr Cardoso's deal with the candidates and said it "appears to have helped market confidence".

Brazil has been given additional loans by international donors, including $30.4bn (19.6bn) from the IMF on Friday, to ensure it can maintain repayments on its $260bn public debt.

Brazil's currency has come off its record lows of recent weeks, helped by the new loans.

No fear

Mr Malan told investors that they did not need to be wary of the economic policies of an opposition party, if it were elected.

"We have come to a level of political maturity and economic rationality, which has been shown by many state (governments), some of which are run by the opposition parties," said Mr Malan

He was referring to Mr Lula da Silva's Workers Party's governance of states such as Rio Grande Do Sul - where it has been in power for a decade, turning it into one of Brazil's most prosperous states.

Brazil's current financial woes began when major investment banks, including Morgan Stanley and Merrill Lynch downgraded Brazil in May over fears of a victory by Mr Lula da Silva.

The minister also stressed the importance of continued credit lines from foreign banks for Brazilian businesses, but added that any recovery was likely to be "gradual."

Mr Malan and Central Bank President Arminio Fraga, who is also in Europe, travelled to the US in August and won a pledge from 16 leading international banks to maintain credit lines.


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