The IMF has announced an international financial aid package for Brazil of more than $41 billion (£27.8 billion) to help shield its economy from global turmoil.

The International Monetary Fund will provide $18 billion and the World Bank and the Inter-American Development Bank together about nine billion dollars, IMF managing director Michel Camdessus said.

The G10 group of industrialised countries will provide 14.5 billion dollars, Camdessus said. Of that, $37 billion will be available in the next 12 months if needed.

"Brazil's programme first and foremost addresses the chief source of its external vulnerability, namely its chronic public sector deficit, which the country is now tackling in a serious and sustainable manner," he said in a statement.

Global markets have been waiting two months for the IMF's seal of approval on Brazil, hoping it will stem the flight of capital from the country that in mid-October averaged $500 million a day after one billion dollars a day in September.

In Brasilia, finance minister Pedro Malan said the aid program would not result in any significant devaluation of the Brazilian currency, the real.

The real initially was pegged one-to-one to the dollar but it has lost some seven per cent of value in recent years, and now the dollar fetches about 1.19 reales.

The three-year agreement calls for a gross domestic primary budget surplus of 2.6 per cent in 1999, 2.8 per cent in 2000, and three percent in 2001, Camdessus said.

The economic reforms combine a large up-front "fiscal adjustment" of over three per cent of GDP, with reforms of social security, public administration, public expenditure management, tax policy and revenue sharing, Camdessus said.

The IMF chief said it would "confront head-on the structural weaknesses that lie at the root of the public sector's financial difficulties," in Brazil adding that "the way is now open for the international community to provide financial support to Brazil that will enhance market confidence in the government's economic policies.".

Shoring up Brazil's faltering economy is also considered critical in the attempt to contain an acute economic downturn that started in east Asia in 1997 and later spread to Russia.

The IMF and central bankers worldwide were pleased last night with the announcement of a tough austerity package that included tax increases and budget cuts totalling $23.55 billion. The plan was designed to close Brazil's gaping budget deficit, which now equals $60 billion, or eight per cent of gross domestic product.

While the package drew praise abroad, Brazilian investors warned that the tax hikes - worth $11.2 billion dollars - could dampen corporate earnings.