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Stocks Flat in Brazil

October 9, 1998

SAO PAULO, Brazil (AP) _ Brazilian markets closed mixed Thursday despite news that Brazil is inching toward completion of an austerity program intended to keep the current economic crisis from deepening.

Sao Paulo’s Bovespa stock exchange closed up 0.3 percent in light trading. The smaller Rio de Janeiro stock exchange closed down slightly at 0.04 percent.

``We have a market that completely lacks personality. Again we followed foreign markets through most of the session,″ said one Sao Paulo trader.

The markets seemed unaffected by Finance Minister Pedro Malan’s announcement that the government would have a proposal on austerity measures for President Fernando Henrique Cardoso by Oct. 20.

The minister didn’t provide details of the measures under consideration, but he said a three-year austerity plan was being prepared. He stressed the initiative for the program comes from Brazil, not the International Monetary Fund.

The IMF announced Thursday it was near agreement on loans to support Brazil, the latest country to fall victim to a rush by panicked investors. The package is expected to total around $30 billion.

President Clinton has sought to speed money to countries threatened with investor flight before those countries have exhausted their currency reserves.

With the world’s ninth-largest economy, Brazil is in trouble mainly because of its huge budget deficit _ nearly $60 billion, more than 7 percent of its gross domestic product.

As the Asian market turmoil sent investors scurrying to safer havens, it became harder for Brazil to get financing for its deficit. An estimated $25 billion left the country in two months. Cash reserves, which reached a record $74 billion in April, have shrunk to about $47 billion.

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