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To: Joe S Pack who wrote (23021)	8/26/2002 10:12:18 PM
From: elmatador	Respond to of 74559

Thailand will complete its debt repayment under the IMF rescue fund by January. (One year ahead of schedule mind you). This another lesson on how "handouts" by tax payers are repaid back, principal and interest. Next time there is a financial crisis in any part of the world, just relax and "hand out" the cash. IMF LOAN: Mixed signals over repayment Published on Aug 27, 2002 The Bank of Thailand's assistant governor, Tarisa Watanagase, yesterday confirmed Prime Minister Thaksin Shinawatra's statement over the weekend that Thailand will complete its debt repayment under the IMF rescue fund by January. In doing so, Thailand will becomes the second country from the Asian financial crisis after Korea to clear its debt, and will do so more than a year ahead of schedule. But central bank Governor Pridiyathorn Devakul yesterday said he would only make the decision to repay the loan ahead of time after uncertainties in the global financial markets pass. "We might or might not make early repayment," he said. But Tarisa had earlier said that the central bank "intends to clear the debt early, as there is more than enough international reserves to do so". " The central bank has already planned early repayment from inflow and outflow figures in the reserves," the deputy said. Tarisa did not reveal the specific timing for early repayment. Thailand drew US$14.3 billion (Bt605 billion) from a $17.2-billion credit line given by the IMF. It had started paying back the debt from the fourth quarter 2000 and now has outstanding debts of $6.5 billion, of which about $1 billion is owed to the IMF and the remaining amount to other central banks and international financial institutions. Thailand's international reserves were placed at $38.2 billion as of August 16, representing about six-month's worth of imports. Thaksin said Thailand would have about $28 billion to $30 billion in foreign reserves after paying off the debt. Market watchers say it is the right time to pay off the debt, as it will restore confidence among foreign investors, adding that it is unlikely to benefit Thailand's credit rating. "This could be viewed in two aspects. It is positive as early repayment reflects that we have a healthy financial position," said Aran Thammano, a member of the Monetary Policy Committee. "However, the amount is small and I don't think it would be of much help [in improving Thailand's credit rating]. If we had done it a year or two ago, it would have been more significant." Thanomsri Fongfarungrung, an economist at Merrill Lynch Phatra Co Ltd, agreed, saying the high levels of foreign reserve provided Thai authorities enough flexibility to repay the debt early. Such a move would allow the country to save on interest payments. Thailand's short-term debt is running at only $13 billion. However, it would not benefit the country's credit rating. Thanomsri said Standard & Poor's had earlier said the country's external stability had not been a concern for a while. However, the agency said when it upgraded Thailand's outlook from stable to positive, that the country was still at risk from its bad loans in financial institutions, as well as pressure from fiscal sustainability. Sansern Samalapa, a Democrat Party member, yesterday said early repayment was not significant as the portion of remaining debt is small and has long been planned for repayment. But Chavalit Thanachanan, chairman of the Stock Exchange of Thailand, said earlier repayment would signal that Thailand was ready for economic expansion. This would draw the attention of foreign investors. It was also unlikely to affect the country's foreign exchange rates, he said.Anoma Srisukkasem, Siriporn Chanjindamanee, Jiwamol Kanoksilp The Nation ------------------- Repayments to IMF: Summary of Thailand's debt obligations: - US$17.2-billion stand-by arrangement ended June 2000 - Total amount drawn down, US$14.3 billion - Total debt outstanding: $6.5 billion (of which $1.16 billion owed to IMF) - Foreign reserves as of August 16: \|$38.2 billion - Started repayment: 4th quarter of 2000 - Early repayment expected: January 2003 - Last scheduled repayment to the IMF: \|2nd quarter of 2004 - Last scheduled repayment to central banks: 3rd quarter of 2004 - Last scheduled repayment to Japan Export and Import Bank: 2nd quarter of 2005

To: Joe S Pack who wrote (23021)	8/26/2002 11:06:01 PM
From: elmatador	Read Replies (2) \| Respond to of 74559

Brazil will confound the financial analysts again By Edmar Bacha Published: August 22 2002 5:00 \| Last Updated: August 22 2002 5:00 From Mr Edmar L. Bacha. Sir, Financial analysts are at it again. Having lost their bets that Brazil would default in 1998, suffer a depression in 1999, and return to hyperinflation in 2001, they are back to their original game - Brazil will default either this year or next. Brazil will prove them wrong again. At a reasonable 60 per cent of gross domestic product, Brazil's government debt is largely held domestically. This is not Mexico 1994, or Russia 1998, or Argentina 2001, or Uruguay 2002, where most of the public debt was in US dollars or held by foreigners. With the recent International Monetary Fund package, Brazil's government has more than enough reserves to service its foreign debt. Most of Brazil's external debt is the responsibility of its private sector and nearly all is hedged domestically by dollar-linked notes of the Brazilian government. There will not be any massive private sector defaults because of the depreciation of the Real. Brazil's currency floats. This is not Mexico 1994, Russia 1998, or Brazil 1998, trying to defend an overvalued currency thus providing an easy way out for investors. If a Brazilian wants to shift his holdings from domestic debt into dollars, he can do so only by finding another investor willing to sell such dollars - and holding Brazil's debt instead. The dollar appreciates but government reserves stay put, and the debt continues to roll over domestically. Part of the domestic debt is dollar-linked (but paid in Reals), and this goes up when the currency depreciates. It is for this reason that the Brazilian government recently raised to 3.75 per cent of GDP the prospective surplus of its all-encompassing, non-interest budget. More can be done, if the Real keeps depreciating, for Brazil's taxes are a hefty 34 per cent of the country's GDP. Capital flight is not what explains the sharp depreciation of the Real. Brazilians are free to buy dollars and send them abroad, but this is duly registered in the so-called CC-5 accounts which are used for many other legitimate purposes beyond capital flight. CC-5 outflows have increased, but only moderately. Foreigners may be surprised, but Brazilians continue to trust that their savings are well protected domestically. The Real is so weak because foreign creditors, decided herd-like to deny Brazil its regular credit lines. Several adverse factors converged to produce a major credit squeeze for the country. But this cannot force Brazil into a default. If the liquidity squeeze continues, Brazil's Real will remain depreciated and the country's economy will contract, thus generating the perspective of a trade surplus high enough to honour the country's external obligations. Meanwhile, the prices of Brazilian assets will remain cheap. After October, once elections are over the capital outflow will stop and a reverse movement will start. And once more Brazil will disappoint the financial whiz-kids. Edmar L. Bacha, Senior Adviser, Banco BBA-Creditanstalt, São Paulo, Brazil <Don't count on Brazil to start the collapse. The risk is not there! And rememeber: USD50 billion out of the US last month. USD200 or was it USD600billion? out of the US taken by the Saudis. Brazil gains support of bankers over credit By Jonathan Wheatley in Sa~o Paulo and Gary Silverman and Ellen Kelleher in New York Published: August 26 2002 23:48 \| Last Updated: August 26 2002 23:48 Brazil on Monday received the support of senior executives at Citigroup, JP Morgan Chase, HSBC and 13 other international banks who met Brazilian officials in an effort to help ease a credit squeeze. In a joint statement, the banks "underlined their long-term commitment to Brazil and their support for the country's economic programme [and] expressed their intention to maintain their general levels of business with Brazil, including trade credit lines". AND Brazil gains support of bankers over credit By Jonathan Wheatley in Sa~o Paulo and Gary Silverman and Ellen Kelleher in New York Published: August 26 2002 23:48 \| Last Updated: August 26 2002 23:48 Brazil on Monday received the support of senior executives at Citigroup, JP Morgan Chase, HSBC and 13 other international banks who met Brazilian officials in an effort to help ease a credit squeeze. In a joint statement, the banks "underlined their long-term commitment to Brazil and their support for the country's economic programme [and] expressed their intention to maintain their general levels of business with Brazil, including trade credit lines".> news.ft.com The collapse will start in the Western Hemisphere. But a little more to the North :-)