Brazil’s President Denies Plans for More Reforms

President Fernando Collor de Mello categorically denied that he is preparing a second package of economic reforms for Brazil to follow the monetary shock therapy he administered in March, newspapers reported Wednesday.

Reports had speculated that rising inflation might force Collor to slam the brakes on the economy for the second time this year.

“People are talking about a Collor Plan II,” Collor said in an interview with Brazilian newspaper editors published Wednesday.

“There will be no Plan II whatsoever,” Collor said. “The plan is the one we’ve got.”

Shortly after taking office in March, Collor took more than one-third of Brazil’s wealth out of circulation by freezing most bank deposits and simultaneously introducing a new currency.

The drastic measures caused inflation, the government’s declared No. 1 enemy, to fall from nearly 100% a month to about 5%. But last month it jumped back to 9%, and economists say price rises are accelerating.

“This 9% inflation has . . . three components,” Collor said. “Rents, . . . clothes and fruit and vegetables. That’s basically it. Everything else is absolutely under control. For August . . . we are expecting inflation of 3%.”

Speaking to reporters in Brasilia on Wednesday, Economy Minister Zelia Cardoso de Mello echoed Collor’s assertions that the rising prices were caused by seasonal factors and were not a sign of a long-term trend.

“Our policies are on course,” Cardoso said. “You cannot compare what happened in the past with this government.”

The pace of internal reform, Collor said, has to a certain extent distracted attention from the question of foreign debt, but he said the matter has not been forgotten.

A year ago, Brazil suspended most interest payments on its medium- and long-term private bank debt of $63.2 billion. The government has said negotiations with creditor banks will have to wait until the country is ready.

“Everyone understands this is the initial implementation phase of an economic program,” Collor said. “We will have to see how things turn out before we know what sort of basis we will have for proposing a renegotiation of the debt.”

He added: “We have never at any moment lost contact” with creditors.

Collor reiterated his opposition to any form of indexing wages to prices, a formula used by previous presidents and one opposition parties are pressing him to continue using.

“I cannot accept any kind of indexation because if I did, I would be responsible for leading the country into hyper-inflation or into a brutal recession,” he said.

“What we want is free negotiation” between workers and employers.