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Strategies & Market Trends : Telebras (TBH) & Brazil

TBH 0.956

+6.7%

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To: Steve Fancy who wrote (11752)	1/15/1999 2:33:00 AM
From: Steve Fancy	Read Replies (7) of 22640

Brazil's Supreme Court OKs State To Hold Debt Payment Dow Jones Newswires BRASILIA -- Brazil's Federal Supreme Court late Thursday ruled that the country's fourth-richest state be allowed to go into receivership on a 57 million reals (BRR) ($1=BRR1.32) debt to the federal government due Friday. Judge Carlos Velloso accepted a plea by Rio Grande do Sul state attorney-general Paulo Torelly that BRR31.2 million be deposited in judicial receivership with the court as a guarantee until the merit of the case be judged. On Jan. 11, Rio Grande do Sul governor Olivio Dutra said that his state's total debt to the federal government - totaling BRR800 million in 1999 - is "unpayable." The court decision follows a 90-day moratorium declared by Minas Gerais state Governor Itamar Franco last week on his state's federal debts - of which BRR26.8 million was due Jan. 10 - and which caused local and international stocks to plunge as a result of renewed doubts about Brazil. Judge Velloso allowed Rio Grande do Sul state to deposit BRR31.2 million as a judicial guarantee until the merits of the case are judged. Torelly told the judge that within 30 days Rio Grande do Sul will present arguments to the court why it's not able to meet its commitments to the federal government. Last week, Governor Dutra's administration held talks with Finance Minister Pedro Malan in efforts to reach an agreement on the state's debt, which the federal government says it won't roll over. On Jan. 11, the government reacted to the Minas Gerais moratorium by blocking a BRR11.7 million federal subsidy payout to the state in retaliation. Dutra, who is a member of the radical Workers'Party (PT), has chosen a different way from Franco's head-on clash with the federal government, resorting to the legal path instead of "rebellion," said political analyst Gerdt Kleyn. -By William Vanvolsem; (5561)244 3095; wvanvolsem@ap.org

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