Itamar Franco

SAO PAULO (AP) — Former Brazilian President Itamar Franco, known as the leader who in the 1990s tamed inflation in Latin America's biggest country, died of a stroke Saturday. He was 81.

Franco died in the morning at Sao Paulo's Albert Einstein hospital, the hospital said in a statement. He had been hospitalized since May after being diagnosed with leukemia and pneumonia.

Franco became president in 1992 after Fernando Collor de Mello stepped down to avoid being impeached as a result of corruption charges. Franco was elected vice president in 1989.

In early 1994, Franco launched the Real Plan, which curbed a monthly inflation rate of about 50 percent by raising interest rates and controlling government spending. High interest rates also attracted more foreign capital that helped finance the country's current account and increase its hard-currency reserves.

The program, considered Brazil's most successful anti-inflationary program, was created by Franco's finance minister, Fernando Henrique Cardoso, who was himself elected president in 1994.

Franco was born June 28, 1930, on a boat traveling between the states of Bahia and Rio de Janeiro. He grew up in the city of Juiz de Fora, in Minas Gerais state, where he began his political career and was elected mayor twice, in 1966 and 1972.

He was elected to the Senate in 1974 and again in 1982.

In 1999, a year after he was elected governor of Minas Gerais, he declared a 90-day moratorium on the state's US$11 billion debt with the federal government, claiming the state was broke. The news fanned fears that Brazil would default on debt payments, and investors pulled their money out of the country.

Franco was elected a national senator in 2010 for the Popular Socialist Party.

The party said on its website that Franco's body will be taken to Juiz de Fora on Sunday. There it will lie in state at city hall. On Monday, he will be cremated in the state capital of Belo Horizonte.

President Dilma Rousseff declared a seven-day mourning period.

Franco never married. It was not immediately known if he had survivors.


Copyright © 2011 The Associated Press