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Group Eyes Brazil Gov’t Shutdown

October 18, 1998

BRASILIA, Brazil (AP) _ Borrowing a chapter from cost cutters in the United States, a federally funded economic institute is advocating a partial government shutdown as a way for Brazil to save money, the Jornal do Brasil newspaper reported Sunday.

Economists with the government-run Economic Research Institute, or IPEA, are proposing the shutdown of nonessential public services such as embassies as a way for Brazil to contain its burgeoning public sector deficit.

The deficit, which now stands at about 7 percent of the country’s gross domestic product, has been flagged as one of the most worrisome financial indicators and the one the government must improve if it is to weather the current financial crisis.

``Some agencies can stop for a few months,″ IPEA economist Francisco das Chagas Pereira was quoted by the newspaper. Under the plan, government workers would still receive their paychecks but the government would save on the costs of day-to-day operations.

According to the Institute’s figures, with the partial shutdown the government could end the year with a surplus of 10 billion reals ($8.4 billion), instead of the 5 billion reals ($4.2 billion) envisioned in an emergency decree issued by President Fernando Henrique Cardoso at the height of the crisis.

Pereira added that in 1999 the surplus could rise to 20 billion reals ($16.4 billion), or more than double the 8.7 billion reals ($7.3 billion) envisioned in the budget currently before Congress.

The advantage of the partial shutdown is that it can be done quickly and would not require new laws or Congressional approval, Pereira said.

But officials at the Planning Ministry, which oversees the country’s budget, are not convinced a partial shutdown will do the trick.

``What good is to shut down temporarily?″ the newspaper quoted Martus Tavares, the Planning Ministry’s executive-secretary.

The government has been delaying the announcement an austerity package aimed at cutting the ballooning deficit.

Originally expected after the Oct. 5 election, the President Cardoso later delayed the announcement until Oct. 20. Now it seems that the package won’t be announced until Oct. 26 _ a day after second round elections for governors in several states.

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