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Strategies & Market Trends : Telebras (TBH) & Brazil

TBH 1.090

+3.8%

Nov 14 3:58 PM EST

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To: Steve Fancy who wrote (12019)	1/19/1999 6:43:00 PM
From: Steve Fancy	Read Replies (2) of 22640

Brazil Minas Gerais Court Issues Decision Favoring Franco Dow Jones Newswires SAO PAULO -- Brazil's Minas Gerais Governor Itamar Franco has won the latest battle in an ongoing war between the states and Brasilia over debt payments to the federal government. A Minas Gerais state court late Tuesday issued a preliminary injunction that impedes the automatic transfer of the state's funds deposited at former state bank Bemge to a federal account in Banco do Brasil, the court said in a written statement. According to a contract signed between former state Governor Eduardo Azeredo and the National Treasury in February 1998, funds equivalent to 13% of Minas Gerais' revenues would be transferred to the federal account monthly. The funds are to pay servicing on a 16 billion reals (BRR) ($1=BRR1.56) debt rolled over 30 years. Franco had filed a suit Sunday, claiming that the accord signed in February is unconstitutional. The court is still to judge the merit of the filesuit. "I'm glad to hear that the court issued the preliminary injunction," said Franco in a written statement. "This decision...is important because of the social and human aspects it addresses." On Jan. 6. Franco declared a moratorium on debt payments to the federal government for 90 days. In response, Brasilia blocked funds corresponding to Minas' share in federal tax revenues, worth BRR11.7 million. On Monday, the Minas Gerais governor hosted a meeting of seven governors who have also claimed their debt obligations will be difficult to meet. The group has vowed to step up the pressure if the federal government doesn't restructure debt contracts. -By Adriana Arai; (5511) 813-1988; aarai@ap.org

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