Lehman Global Strategist Sees Latin Plan As Crucial
Dow Jones Newswires
NEW YORK (Dow Jones)-Market watchers are anxiously awaiting
announcement of a Latin American assistance package that could range
from $50 billion to $80 billion, Lehman Brothers Holdings Inc.'s (LEH)
director of global sovereign market strategy said Monday evening.
The package, which could be announced as early as Wednesday by the
International Monetary Fund, is expected to help build market confidence
by assisting Brazil's economy with a combination of funding and fiscal
controls, said Jose Barrioneuvo.
"We'll be looking for a rapid decline in interest rates and expecting that the
government will start extending the maturity of its internal debt," after the
program is put into place, he said.
The IMF-led Latin American liquidity fund will help countries in that region
support their reserves, and Brazil is expected to be among the first
recipients. Barrioneuvo said estimates for the fund range from $50 billion
to $80 billion, although he believes $50 billion is the more realistic level. Of
that amount, Brazil is expected to receive about $30 billion, he said, an
amount that is a critical starting point for market confidence.
"That $30 billion is going to be an important initial step in the context of
market liquidity conditions improving," he said.
Besides the funding, Barrioneuvo said people are awaiting a package of
fiscal measures that should be announced at the same time. Among the
items he is looking for are an increase in the country's financial transactions
tax; a tax on bank interest revenue or earnings; and spending measures
that will be tied to fiscal reforms at the congressional level. Almost as
important as the measures themselves will be how specifically they are laid
out, he said.
"What is critical for the Brazilian strategy is for the market to get a sense of
the timetable of the fiscal programs to be announced," he said.
-Lynn Cowan; 201-938-5293;
lynn.cowan@cor.dowjones.com |
