Brazil's President, Shunning Shock Plans, Seeks Support For Constitutional Changes to Speed Economic Reform

By , Special to The Christian Science Monitor

AFTER 43 days of negotiations with congressmen, governors, and other officials, Brazilian President Fernando Collor de Mello sent Congress his final draft of a bill Friday that would amend the 1988 constitution, to ease the way for economic reforms. Mr. Collor asked for popular support for the amendments in a nationwide television and radio address Saturday night.Promising that he would not carry out yet another economic shock plan to curb Brazil's stubborn inflation, Collor said that "the only shock left is the shock of reality." The Brazilian president explained, using a number of charts and graphs, that the current Constitution limits the government's ability to straighten out its finances, and to improve the investment climate. The amendments would reduce federal employees' job stability, end the state's monopoly on telecommunications and petroleum, wipe out the legal distinction between foreign and Brazilian businesses, allow the rapid implementation of newly created taxes, and allow the government access to secret banking documents (to improve tax collection). It also does away with a never-implemented interest ceiling of 12 percent, and cleans up state governments' finances. Congressional leaders will meet Tuesday to schedule a vote on the amendment. Three-fifths of the Senate and Chamber of Deputies must vote for the amendment in order for it to become law. Collor also made a plea to renew his program to sell off state-owned companies, which was halted last month in the midst of a series of legal disputes and a violent street demonstration. The first privatization, the auction of a state steel mill, has now been rescheduled for Oct. 24. "The state has no funds to invest in these companies and make them competitive," he explained. To increase the amendments' chances of congressional approval, Collor last Friday also announced a $3 billion rural credit package for this and next year's harvest. The package also includes interest-rate cuts for farmers, and improved minimum farm prices. Brazilian agricultural production has fallen drastically in the last five years, as government credit has shrunk and interest rates have soared. This year, grain production is estimated at 56 million tons, down from 72 million tons in 1989.

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