Record Flow Seen in Brazil’s Dollar Drain

SAO PAULO, Brazil —  Fears of political and economic instability are inciting people to spirit billions of dollars out of Brazil at an alarming rate, economists and officials say.

A record $12 billion is expected to leave the country illegally this year, economist Clarice Pechman, one of the country’s leading foreign exchange experts, said in an interview.

Legal profit remittances also are up, reflecting decisions by many subsidiaries of foreign-owned multinationals to send money back home rather than reinvest it in Brazil.

The dollar drain hurts this economically ailing country, which desperately needs foreign currency to buy foreign goods for its modernization and repay a staggering foreign debt, the largest in the Third World. As reckoned by the World Bank, Brazil’s obligations to foreign lenders totals $120 billion.

“With hyper-inflation just around the corner, a government that lacks any credibility and all sorts of uncertainties surrounding the country’s political and economic future, it is only natural that those who can will send their money out of the country,” said economist Joaquim Eloi Cirne de Toledo of the University of Sao Paulo.

Outflow Increasing

Brazil’s annual inflation rate exceeds 1,000%. The government of President Jose Sarney has been widely discredited because four anti-inflation programs have failed.

Presidential elections on Nov. 15 add to investors’ uncertainty. Brazilians will choose their president for the first time in 29 years, following the end of an authoritarian military regime that ruled from 1964 to 1985.

Pechman said that by her reckoning, $7.5 billion left the country illegally last year, compared to $5.8 billion for the entire 1978-1982 period. The amount is expected to rise again this year.

“That will bring to $41.1 billion the amount of foreign exchange illegally accumulated in overseas accounts,” she said.