On Sunday, October 4, 1998, as international bankers, investors, finance ministers and officials from the leading multilateral development banks met in Washington for the annual World Bank and International Monetary Fund meetings, many eyes were looking south, to Brazil. Late in the afternoon, when Brazil’s finance minister broke the news that Fernando Henrique Cardoso had narrowly won Brazil’s election in the first round, “the room broke into loud applause,” according to Bob Fernandez reporting for Knight Ridder. “Cardoso is an International Monetary Fund favorite,” Fernandez explained. Officials had been scrambling for weeks to put together an international bailout package for Brazil in response to the Asian Financial Crisis, which threatened to spread to other emerging markets, including those in South America. But the negotiations were held behind closed doors. With key elections on the horizon in Brazil, Cardoso, the incumbent and leading candidate, went to great lengths to distance himself from the IMF package. The New York Times reported on October 1: “Among ordinary Brazilians, the I.M.F. is associated, if not faulted, for a punishing recession through the 1980's.” On October 2, Reuters reported that Cardoso “has repeatedly denied that he will announce austerity measures immediately after the polls close.” Even after his first-round victory, Cardoso was reluctant to announce any measures before governors and state officials faced critical run-off elections later in the month, worried that an embrace of the IMF plan could hurt their chances. Cardoso’s main opponent in the presidential race was Luiz Inacio Lula da Silva of the Workers’ Party, who would later go on to win the presidency in 2002, and again in 2006. Lula voiced strong criticism of any potential deal with the IMF, saying that it would “tighten one more knot on the neck around Brazilians.” Lula would go on to end Brazil’s borrowing relationship with the Fund in 2005 when he was president. But the U.S. and other leading players in the global financial system were seen as heavily supportive of Cardoso in ‘98. The New York Times reported in late September (emphasis added): The proposed package would be openly negotiated only after the presidential election in Brazil next Sunday, and only if -- as expected -- Mr. Cardoso is re-elected. Nevertheless, a senior Clinton Administration official acknowledged on Friday that active discussions are already in progress with the Brazilians, the I.M.F., other governments and private lenders.
On Sunday, October 4, 1998, as international bankers, investors, finance ministers and officials from the leading multilateral development banks met in Washington for the annual World Bank and International Monetary Fund meetings, many eyes were looking south, to Brazil. Late in the afternoon, when Brazil’s finance minister broke the news that Fernando Henrique Cardoso had narrowly won Brazil’s election in the first round, “the room broke into loud applause,” according to Bob Fernandez reporting for Knight Ridder. “Cardoso is an International Monetary Fund favorite,” Fernandez explained. Officials had been scrambling for weeks to put together an international bailout package for Brazil in response to the Asian Financial Crisis, which threatened to spread to other emerging markets, including those in South America. But the negotiations were held behind closed doors. With key elections on the horizon in Brazil, Cardoso, the incumbent and leading candidate, went to great lengths to distance himself from the IMF package. The New York Times reported on October 1: “Among ordinary Brazilians, the I.M.F. is associated, if not faulted, for a punishing recession through the 1980's.” On October 2, Reuters reported that Cardoso “has repeatedly denied that he will announce austerity measures immediately after the polls close.” Even after his first-round victory, Cardoso was reluctant to announce any measures before governors and state officials faced critical run-off elections later in the month, worried that an embrace of the IMF plan could hurt their chances. Cardoso’s main opponent in the presidential race was Luiz Inacio Lula da Silva of the Workers’ Party, who would later go on to win the presidency in 2002, and again in 2006. Lula voiced strong criticism of any potential deal with the IMF, saying that it would “tighten one more knot on the neck around Brazilians.” Lula would go on to end Brazil’s borrowing relationship with the Fund in 2005 when he was president. But the U.S. and other leading players in the global financial system were seen as heavily supportive of Cardoso in ‘98. The New York Times reported in late September (emphasis added): The proposed package would be openly negotiated only after the presidential election in Brazil next Sunday, and only if -- as expected -- Mr. Cardoso is re-elected. Nevertheless, a senior Clinton Administration official acknowledged on Friday that active discussions are already in progress with the Brazilians, the I.M.F., other governments and private lenders.
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