WASHINGTON An IMF aid package for Brazil on its usual conditions will only make things worse and could push its economy into depression, leading economist Jeffrey Sachs said Friday. Each of the IMF programs in the last year has failed because they have all been predicated on policies that .... result in increased panic rather than reducing panic, Sachs, director of the Harvard Institute for International Development, told a seminar here.

We are likely to see the same thing in Brazil with the new package coming up, he said, referring to expectations that Brazil will ask the International Monetary Fund for help after elections on Sunday. Rumor has it that we are going to put in $50 billion to save the real (Brazil's currency) next week .... I would say that this is a wildly wrong-headed approach to the crisis, Sachs said.

Such a package is a recipe for disaster, a waste of our money and depression in Brazil. IMF chief economist Michael Mussa defended Brazil's efforts to maintain its currency's value since last year, saying that any devaluation could have produced concerns over hyper-inflation. He said that if Brazil came to the IMF seeking a package aimed at holding its currency steady, it would not be the responsible course of action of the IMF or the international community to reject the request and tell Brazil to devalue.

(AFP)