Brazil: Now The Focus Is On Fiscal Reform

Thanks to a tightfisted monetary policy, Brazil's once-surging economy is coming in for a soft landing, but the challenge of fiscal reform remains.

After the 1994-95 flood of domestic demand and consumer credit, the economy appears ready to settle into a period of moderate growth, with a stable currency and lower inflation. A recent survey of 29 Brazilian financial institutions put 1996 growth in the 2.5%-to-4.5% range, compared with 4.2% in 1995 and nearly 5.7% in 1994. The currency, now at 0.97 reals per U.S. dollar, should end the year between 1.03 and 1.10.