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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: djane who wrote (7480)	9/4/1998 2:48:00 AM
From: Steve Fancy	Respond to of 22640

IMF offers Latin America words of support, no cash Reuters, Thursday, September 03, 1998 at 22:50 (Adds IMF statement, comments from ministers) By Katherine Trinidad WASHINGTON, Sept 3 (Reuters) - The International Monetary Fund (IMF) offered Latin American nations words of support but no immediate cash on Thursday after key stock markets in the region spiraled downwards and currencies plummeted. The IMF said after the first day of a meeting with top Latin American economic officials that it stood "ready to recommend the strengthening and broadening" of its existing support to countries of the region if necessary. But with little money to lend, the IMF limited itself mostly to expressing confidence "that most countries in the region would continue to show positive output growth, and low or declining inflation." IMF officials say the lending agency will have just $10 billion available for loans by the end of this year. Its cash reserves have been drained by huge rescue deals for Russia and three Asian states, and the U.S. Congress has so far balked at providing the $18 billion the Clinton administration is seeking to replenish IMF resources. Gloom and despondency engulfed most of the region's financial markets on Thursday as Brazilian stocks closed at a two-year low, Argentine and Venezuelan shares nose-dived and the Mexican peso fell to a new record low against the dollar. Rattled by global economic turmoil and a devaluation of the Colombian peso that could spark a currency crisis throughout the region, top officials from nine Latin American nations were meeting under the auspices of the IMF Thursday and Friday to discuss ways to defend their economies. Finance ministers attending the meeting were furious at U.S. credit agencies who issued critical reports on several countries in the region as the IMF meeting was being held, hitting already struggling financial markets hard. Moody's Investors Service downgraded or put on review the foreign debt of Mexico, Brazil, Argentina and Venezuela while a director at Standard & Poor's said Brazil and Venezuela were the least credit-worthy countries in the region and would be hurt most by current market turmoil. Brazil's Finance Minister Pedro Malan called Moody's downgrade of Brazil's foreign currency debt rating inexplicable. "It is something we can't understand. We have not been invited to comment on their underlying analysis. They have not been at the central bank. They have not been at the finance ministry," Malan told reporters. Following Wednesday's devaluation of the Colombian peso, there was widespread speculation that Venezuela's bolivar would be next. Finance Minister Maritza Izaguirre told reporters at the IMF that Venezuela planned no big devaluation. "We are not going to do some macro-devaluation, and we are not going to change our exchange controls. We are very clear on that message," she said. The Latin American officials said they would maintain both open capital markets and their current exchange rate policies and regimes. U.S. Treasury Secretary Robert Rubin lent his support, lunching with the officials and saying developments in the region were "profoundly important" to the United States. Mexico's Finance Minister Jose Angel Gurria complained that markets were overreacting to world financial problems and failing to discriminate between emerging economies. "Everyone is thrown in the same basket, saying they are all emerging markets," he said. Gurria denied that Latin American countries were in Washington to seek IMF funds to ward off financial troubles. "We have not come to ask for money. We have not come here to organize a great fund to support Latin America," he said. Some analysts though said the meeting looked like a kind of dress rehearsal for a plea for IMF aid later in the year if regional economic conditions worsen. Canada's Finance Minister Paul Martin, who also attended, said Latin America was committed to economic reform and had taken the right steps so far. Finance officials from Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela participated in the meeting. While Venezuela, which is Colombia's second largest trade partner, is considered most vulnerable to devaluation, investor attention has increasingly focused on Brazil, Latin America's economic powerhouse, whose gross domestic product of $800 billion is nearly twice that of Mexico's. President Fernando Henrique Cardoso, seeking reelection this year, has vowed not to devalue. Economists say a devaluation could plunge the entire region into a recession. "Brazil has the resources to react to any emergency," Cardoso said in Brasilia on Thursday. "In this moment of turbulence, we have the conditions to advance." Copyright 1998, Reuters News Service

To: djane who wrote (7480)	9/4/1998 2:50:00 AM
From: Steve Fancy	Respond to of 22640

IMF:Latin America Has Making Progress In Structural Reforms Dow Jones Newswires WASHINGTON -- Economic policy makers from nine Latin American countries on Thursday pledged to maintain their current economic plans and take further steps, "if needed, to preserve overall macroeconomic stability" in the midst of the global market crisis. "The authorities noted that the external environment had deteriorated further in recent weeks, especially reflecting market reactions to the crisis in Russia. Against this background, they reaffirmed their commitment to promote sustained growth," said a communique issued after the first day of meetings with International Monetary Fund officials here. The statement said each country in the region needs to keep its current exchange rate scheme in place, maintain open capital markets and deepen structural reforms. It also cited the need for "strategies to better manage risks" from market volatility, and called on international financial institutions to look at possible ways to respond to such turbulence. According to the communique, the Fund expressed its confidence that Latin America could "carry out these policies in a timely manner." Along those lines, the IMF "stands ready to recommend the strengthening and broadening" of the support it already offers several of the nations in the region, the statement said. In addition, the statement said further "regional surveillance" would be done at the annual meeting of the IMF and World Bank, to be held in October. The current round of talks, which will continue Friday, has been billed as an effort by Latin America to distinguish itself from the largely external forces that have unsettled global markets. The more-recent Russia-led turmoil followed earlier woes that hit Latin America particularly hard, such as slumping commodities prices, the downturn in Asia, adverse weather conditions and volatile capital markets. A series of measures already taken by the countries in the region were seen as "critical" to preserve the region's economic progress, "a fact that should be reflected in market sentiment." The meetings include finance ministers and central bank presidents from Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venzuela. On Thursday, U.S. Treasury Secretary Robert Rubin, Federal Reserve Vice Chairman Alice Rivlin and top Canadian officials also participated.