Amadeusz Juskowiak

Brazil antiinflation plan limps to anniversary

inflation plan initially hailed at home and abroad as the saviour of the economy is limping towards its first anniversary amid soaring prices widespread shortages and a foreign payments crisis

Announced last February 28 the plan froze prices fixed the value of the new Cruzado currency and ended widespread indexation of the economy in a bid to halt the countrys 250 pct inflation rate

But within a year the plan has all but collapsed

The situation now is worse than it was Although there was inflation at least the economy worked a leading bank economist said

The crumbling of the plan has been accompanied by a dramatic reversal in the foreign trade account In 1984 and 1985 Brazils annual trade surpluses had been sufficient to cover the 12 billion dlrs needed to service its 109 billion dlr foreign debt

For the first nine months of 1986 all seemed to be on target for a repeat with monthly surpluses averaging one billion dlrs But as exports were diverted and imports increased to avoid further domestic shortages the trade surplus plunged to 211 mln dlrs in October and since then has averaged under 150 mln

Reuter