It will be provided if Brazil needs the money and if it continues to comply with lending conditions. Those conditions, from a letter of intent that is about to be signed, will presumably entail austerity steps like constraints on government spending and privatization of industry. American private banks and other major lenders to Brazil, who will be among the biggest beneficiaries of any plan that stabilizes the economy, will not contribute directly. Under pressure from the United States, however, they are expected to maintain or expand credit they had been extending to Brazil until Russia defaulted in August. All official loans to Russia have been suspended since August, and private lending there has dried up, forcing Russia to speed up the printing of money to pay pensioners and even the military.
Brazil is viewed by most experts as being in fundamentally good shape.
It had relatively low interest rates and healthy economic growth, and a good import-export balance until the Russian crisis, when investors took flight. But inside the U.S. Treasury, there is concern that President Fernando Henrique Cardoso may not have the clout necessary to push through some of the politically painful spending cuts that the loan package requires. Like most IMF aid, the Brazil package will be turned over to the country in stages, as the Congress enacts the conditions. The U.S. money will probably not be disbursed until Brazil has met many of those conditions, according to officials familiar with the plans. Administration officials say that while the world economic turmoil has abated somewhat in the past three weeks, members of Congress are sufficiently scared of the potential effects here of an economic collapse in Brazil that they will offer few objections.