Brazil & Southern Cone - 26 October 2004

The government introduced a bill to congress on 1 October seeking to establish a tax on land which it hopes will produce an extra US$100m-US$125m per year over the next ten years to be channelled into projects to cut poverty. The government is currently trying to seal a deal with the US under the US Tropical Forest Conservation Act, which offers developing countries debt forgiveness while generating funds for conservation activities. Belize, Panama, Peru and El Salvador each benefit from the TFCA. Paraguay's outstanding debt to the US is US$10.8m: the conservation areas to benefit from the scheme would be San Rafael in the west and Paso Bravo in the east.

Outlook

The president of the central bank, Gabriel González, said on 19 October that the economy would grow by 2.6% this year. He said that it would never grow by any more than this unless reforms were implemented to increase productivity and competitiveness. The guaraní­ has slipped against the US dollar to more than G6,000 to US$1 for the first time in seven months.