- The Washington Times - Tuesday, August 6, 2002

BRASILIA, Brazil (AP) U.S. Treasury Secretary Paul O'Neill said yesterday that Washington strongly supports Brazil's talks with the International Monetary Fund for a new bailout package to help it fend off a debt crisis.
In a meeting with President Fernando Henrique Cardoso, Mr. O'Neill said he told the Brazilian leader, "We were very supportive of the discussion they are having with the IMF."
Brazil is reported to be seeking about $10 billion to prop up its currency, which tumbled sharply last week.
"I understand the IMF has said they feel very good about their progress in the talks, and I think things are going forward," Mr. O'Neill added.
Mr. O'Neill came to Brazil on Sunday evening on a four-day tour of South American countries, including Argentina and Uruguay, which are seeking more consistent U.S. support for plans to repair their ailing economies.
Mr. Cardoso had threatened not to receive Mr. O'Neill after the U.S. official suggested that some South American nations were diverting international financial aid to Swiss bank accounts. Mr. O'Neill backtracked, but the remarks caused ill feelings. A group of protesters outside the presidential palace burned the U.S. flag.
Yesterday, Uruguay received a transfer of $1.5 billion from the U.S. Federal Reserve to shore up its embattled financial system. Bush administration officials announced the emergency loan on Sunday.
Uruguay shuttered all state and private banks last week after panicked depositors began emptying their accounts. Yesterday, banks began operating two hours before their usual noon opening in anticipation of a flood of customers.
The U.S. assistance to Uruguay is to be repaid within days once Uruguay receives a new loan package from the IMF, the World Bank and the Inter-American Development Bank.
Uruguay's four-year economic tailspin has been exacerbated by the unraveling of the Argentine economy next door. The loan marks the first time the Bush administration has provided direct economic support to a country in financial crisis and underscored growing U.S. concern about the widening economic troubles in Latin America.
Mr. O'Neill said last week that the administration supported more assistance to Brazil and Uruguay because those countries were pursuing appropriate policies to deal with their economic troubles. He did not mention Argentina, which is struggling to devise a sustainable plan.
On Sunday, Mr. O'Neill spent three hours dining at the house of Central Bank Gov. Arminio Fraga in Rio de Janeiro along with Finance Minister Pedro Malan and the presidential Chief of Staff Pedro Parente.
He was to fly later to Sao Paulo, Brazil's financial center, for meetings with business leaders.

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