Brazil Inaugurates Collor de Mello : 40-Year-Old President Promises Reforms to Cut Inflation

Fernando Collor de Mello was inaugurated today for a five-year term as Brazil’s first popularly elected president in 29 years, and he pledged sweeping reforms to end inflation and corruption.

Thousands of people cheered and waved banners proclaiming a new Brazil.

But many people were nervous about economic measures Collor de Mello has said he will announce Friday to slash crippling inflation, running at 2,700% yearly.

Banks were closed for three days beginning Tuesday to halt frenzied speculation, and police were called to shops that illegally increased prices.

Collor de Mello, at 40 Brazil’s youngest president ever, promised to resolve the unprecedented economic crisis.

“Inflation is enemy No. 1,” he said. “My presidency will wager everything on victory against this social cancer.”

Collor de Mello pledged to combat “corruption and prevarication, paid idlers who see the state as a source of personal or family gain.” He said Brazil will encourage modernization of the largely state-controlled economy and welcome foreign investment.

Brazil intends to pay its $114-billion foreign debt, he said, but the country’s growth comes first.

“We don’t want confrontation,” Collor de Mello said. “But the question is how much we can pay after we guarantee our economic growth.”

Eighteen heads of state or government attended the ceremony. The United States was represented by Vice President Dan Quayle.

In 1985 Brazil returned to civilian government through an electoral college vote set up by the departing 21-year military regime and Congress established the direct vote. Jose Sarney, who became transitional president in 1985, passed the green and yellow presidential sash to Collor de Mello.

Expectations of a brief wage-and-price freeze, massive layoffs of federal employees and other drastic measures to cut Brazil’s $31-billion budget deficit sent tremors across the nation of 150 million.

Government officials ordered shop owners not to raise prices, and police visited stores that failed to heed the warning. Some shops raised prices by as much as 150%.

Brazilians waited in block-long lines outside automatic bank tellers, where daily withdrawals were limited to the equivalent of $47 per person.

Labor unions, representing more than half of Brazil’s 60-million work force, threatened to call strikes if wages are frozen.

Business activity slowed as rumors of drastic economic measures swirled across the country.

Media reports said the Central Bank would devalue the new cruzado by 30%, or replace the Brazilian currency with another.