From Hospital, Leader Freezes Brazil Spending

The first Cabinet meeting of Brazil’s democratic administration received a written order Sunday from President-elect Tancredo Neves prohibiting any new government spending for 90 days as part of a “frontal attack on inflation.”

Neves imposed the spending freeze in a message sent to the meeting of 26 ministers from the hospital in Brasilia, the capital, where the president-elect is recovering from emergency surgery that kept him from being sworn in as president by Congress on Friday.

Dr. Carlos Santsa, minister of public health, said Neves will probably take office formally March 25. Neves underwent surgery for an intestinal infection and has been reported to be recovering rapidly.

The message to the Cabinet, read by Vice President Jose Sarney, showed that Neves has made a basic decision that reduction of inflation is the No. 1 priority for the new civilian government, in office after 21 years of authoritarian military rule.

The outgoing regime has left a critical financial situation: 225% inflation last year, internal debt of more than $27 billion and foreign debt of $100 billion, and a money supply that increased 19% in February when it was supposed to contract 6% under an agreement with the International Monetary Fund.

Neves discarded recommendations from some of his political advisers that the government should begin “impact programs” devoting money to small public works projects that would create jobs in depressed urban areas and distribute food-for-work in rural areas.