Word: braziller
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Dates: during 1980-1989
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...Brazil faces scheduled payments this year of $13.8 billion in interest and principal, far more than the country can raise without new credit. A $10.2 billion emergency loan package put together in February by the IMF and Western commercial banks came unraveled because the Brazilians did not meet all the agreed-upon conditions. Though they curbed imports enough to come very close to a target $3 billion trade surplus for the first half of the year, they failed to slow inflation and government spending. As a result, the IMF and the banks in May suspended the flow of loan money...
...Brazil's leaders have come to recognize that one of the main causes of the country's problems is its indexation system, which makes inflation difficult to cool off once it heats up. The program unveiled last week is the first major step toward dismantling that system. In the past, price rises have led to automatic hikes of comparable size in wages, pensions, interest rates and other payments. When indexation went into general use in 1973, government economists thought it would insulate people from the worst effects of inflation. The problem, however, was that unusual price hikes caused...
While indexation fans Brazilian inflation, one root cause of rising prices is excessive government spending. State-owned companies, which are involved in everything from energy to real estate and generate roughly two-thirds of Brazil's economic output, have become bloated and inefficient. In the past decade their expenditures have more than doubled, even after adjustment for inflation. Under pressure from the IMF, Brazil has agreed to cut the budgets of state-owned companies by 3% and to slash their capital spending...
...Brazil has a long way to go before recovering its economic health. Buffeted by the global recession, the country has been suffering for two years. Since 1980, the per capita gross national product has declined by 4.4%. In the first quarter of this year, retail sales dropped by 13.3% in Rio de Janeiro and 10.3% in São Paulo. Factories that produce construction equipment and other capital goods are operating at only 20% of capacity, and 8.5% of the country's workers have been laid off. Of the entire working-age population, 40% is either unemployed or working...
...empty their wallets and even shoes, where some people hide large bills. The rich are becoming fearful and cautious. At an exclusive dinner in São Paulo given for Antonio Gebauer, a senior vice president with New York's Morgan Guaranty Trust Co., one of Brazil's major creditors, 21 security guards were spotted among the guests, in corridors outside the room and on the roof of the building...