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

To: Steve Fancy who wrote (8918)	10/8/1998 4:22:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shrs drift in low volume, waiting for steps Reuters, Thursday, October 08, 1998 at 15:30 SAO PAULO, Oct 8 (Reuters) - Brazilian shares were drifting in the loss zone in extremely low volume on Thursday, as investors simply stayed away from the market waiting for details on an expected set of budget-slashing measures. The key Bovespa index (INDEX:$BVSP.X) was down 1.48 percent at 6,065 points by mid-afternoon trade, trimming earlier losses on speculative buys, brokers said. Shares worth a low 230 million reais ($195 million) had changed hands. "The market wants to know just how much the government is going to cut from the budget, and where it is going to get that money from," said one local trader. Brazilian Finance Minister Pedro Malan earlier in Washington announced an agreement with the International Monetary Fund (IMF) on fiscal savings targets for the next three years, but revealed no details on how to achieve them. The news was widely ignored by the market, brokers said. "The situation is the same. Until there is something concrete, we'll just keep looking at Wall Street shares," said a trader at Banco Santander. By mid-afternoon, benchmark Telebras receipt preferred (SAO:RCTB40) was up 0.75 percent at 80.50 reais. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8918)	10/8/1998 4:33:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Begins Fiscal Restraint Effort With Bits And Pieces October 8, 1998 By MARGARITA PALATNIK Dow Jones Newswires NEW YORK -- Reading between the lines, Brazilian President Fernando Henrique Cardoso's failure to announce specific economic measures in his victory speech isn't necessarily a sign of inaction, observers say. Addressing the nation Wednesday for the first time since his re-election, Cardoso made general statements on his commitment to fiscal rectitude and promised a full-blown fiscal program by Oct. 20. But observers note that since Sunday's polls, the government has offered a steady flow of concrete measures and controlled leaks. The statements by lower-rung officials are small-but-meaningful contributions to control the budget deficit, analysts say. And control is needed: with its fiscal deficit of more than 7% of gross domestic product, consensus estimates place the needed cuts and revenue increases at more than 20 billion reals (BRR) ($1=BRR1.18) for 1999. The Finance Ministry hopes to lead by example. On Wednesday the ministry said it will trim 225 million reals (BRR) (1$=BRR1.18) yearly from its budget by shutting regional offices and dismissing 1,100 people. Tuesday, the federal government announced it would scrap 150 appointed posts, and, more importantly, fill only one of every six civil servant positions that comes open due to retirement or death. That same day, regulators said state oil-company Petrobras will raise royalties it charges to 10% from 5%, bringing in an additional BRR400 million for the Treasury. The more piecemeal approach helps Cardoso walk a fine line between his pressing political duties - gubernatorial elections are going to second rounds in several key states - and a short-fused financial community that expects a well-rounded fiscal package as a pre-condition for Brazil receiving billions of dollars of aid from multilateral agencies. Second-round elections in Sao Paulo, Rio de Janeiro and Rio Grande do Sul pose serious concerns for the government. Analysts say that Cardoso can't compromise the results by announcing bitter austerity programs. This is because if Cardoso hopes to implement serious cost-saving measures, he can't negotiate before new governors are elected. Neither can his coalition afford to lose governors in big-budget states where it's up against spendthrift candidates. "The big bananas are the states," said Walter Stoeppelworth, head of reaserch for Fleming-Graphus in Sao Paulo. "The fiscal adjustment is not done only at the federal level." To illustrate his point, Stoeppelworth said that between July 1997 and June 1998 state governments ran up a deficit of BRR9.4 billion. Cardoso isn't just trimming spending. He's also actively enlisting political support for unpopular measures. The president has a powerful ally in Senate chairman Antonio Carlos Magalhaes. Tuesday Magalhaes - who has opposed many a tax hike in the past - signalled his support for an increase in a temporary tax on financial transactions, known as the CPMF, and for subsidy cuts, including those in poor states. "It's no coincindence that ACM said yes, increase the CPMF tax, and yes, attack the subsidies to the north and northeast," Stoeppelworth said. "It's clear that they're doing a gradual dissemination through controlled leaks." "The fact that (Magalhaes) left the CPMF window open is very important. He has a lot of influence in Congress," added Banco Pactual economist Joao Carlos Scandiuzzi. The president has to strike a balance between "satisfying the markets impatience for a fiscal package and his political needs," Stoepppelworth said. "He needs to lobby senators and congressmen, but this general impatience will put pressure on him again next week." -By Margarita Palatnik; 201-938-2226; margarita.palatnik@cor.dowjones.com

To: Steve Fancy who wrote (8918)	10/8/1998 4:49:00 PM
From: Steve Fancy	Respond to of 22640

Verbatim Text of IMF-Brazil Statement Dow Jones Newswires Verbatim Text Of IMF-Brazil Joint Statement The Brazilian authorities and the IMF management have discussed during the Annual Meetings the main lines of the Brazilian Government's proposed economic policy framework. The authorities have emphasized their determination, highlighted in the September 23 speech of President Cardoso, to put rapidly in place a strong, front loaded and sustained fiscal adjustment program, designed to stabilize the ratio of the public debt to GDP by the year 2000. This will require the achievement as from 1999 of primary surpluses of the overall public sector in the range of 2.5-3 percent of GDP. The government is preparing the policy initiatives needed to ensure this outcome, and intends to announce them as soon as feasible during the month of October. The authorities have also emphasized their firm commitment to their current exchange rate regime, the maintenance of a flexible interest rate policy, the non-imposition of any controls on capital outflows, the full service of the external and domestic public debt, and the continuation of their ongoing structural reform efforts in the social security system, the tax system, the budgetary system and institutions, the financial system, the labor market and privatization, among others. The IMF management fully supports these policies. Discussions will continue in the days ahead, with the aim of reaching agreement soon on a detailed program of fiscal and other macroeconomic and structural policies, that could be supported financially by the IMF and other members of the international community.

To: Steve Fancy who wrote (8918)	10/8/1998 4:50:00 PM
From: Steve Fancy	Respond to of 22640

Wolfensohn:World Bk May Give Brazil Aid For Social Programs Dow Jones Newswires WASHINGTON -- World Bank President James Wolfensohn Thursday said the World Bank would provide funds for education, health, and poverty alleviation for Brazil as part of an international support package for Latin America that is expected to be announced soon. At a press conference concluding the annual meetings of the International Monetary Fund, Wolfensohn said, "We'll be there, providing funding in the context of structural programs." He also said spending for such programs will be front-loaded. Wolfensonh said although he hasn't personally been involved in talks on a package for Brazil, he had "complete agreement" from Brazilian Finance Minister Pedro Malan that if an IMF package is announced, the World Bank would strive to provide adequate funding for Brazil's social programs. "I've made it very clear what the Bank is prepared to do is to stretch to the limits the support of such programs," Wolfensohn said. He said he believed the crisis confronting Brazil and Latin American countries was different from those that have shook Asian nations and Russia, because many Latin American countries had already undertaken economic reform programs after the Mexican economic crisis hit in 1994. Wolfensohn said there is a "huge liquidity problem" in developing countries, because of the pullout of capital in those nations by overseas banks and investors. Lending by banks to developing countries has fallen to "effectively zero" from around $100 billion, while investment in the securities of those countries have fallen by over $40 billion, he said. Wolfensohn also warned that countries that are now healthy may be swept into the crisis unless the World Bank can continue to extend funds to those nations. "My biggest concern, which I have not frankly fully evaluated until these meetings, was that the medium-sized countries that aren't in crisis will be in crisis unless we can provide continuing funding," he said. -By Kenneth McCallum; 1-202-256-4885; kmccallum@ap.org

To: Steve Fancy who wrote (8918)	10/8/1998 4:52:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Malan: Country May Not Use IMF Funds - Estado Dow Jones Newswires SAO PAULO -- Brazilian Finance Minister Pedro Malan Thursday said the country may not need to use funding from the International Monetary Fund to emerge from the turmoil afflicting local financial markets, the Estado news agency reported. Speaking in Washington shortly after Brazil and the IMF issued a joint communique, Malan reiterated that Brazil doesn't need funds for the short term and that any package will be of a preventive nature, rather than emergency aid. The minister echoed the IMF/Brazil statement, saying the country will stick to its foreign exchange system and won't impose controls on capital flows. Malan said Brazil isn't facing a crisis, but noted that 1999 will be a difficult year for the country. The minister declined to comment on the amount of a possible credit line from international lenders, noting that it doesn't make sense to hasten an announcement that will be made at the appropriate time. He said there is "no magic number" for the amount of aid Brazil needs from multilateral institutions. He said financial aid to Asian countries and Russia this year were easier to determine because reserves in those countries had been almost completely eroded, which is not the case with Brazil. Malan said Brazil's reserves stand at around $47 billion, which he said is enough to honor financing commitments over the next few months. The reserves figure cited by the minister is down from the $67 billion announced by the Central Bank for the end of August. Echoing what President Fernando Henrique Cardoso said in a national address Wednesday, Malan said the government would present proposals on fiscal austerity measures for the president's review by Oct. 20. He said the public announcement of those measures could be made shortly thereafter. In a speech two weeks ago, President Cardoso first mentioned the government's plans to implement austerity measures to trim Brazil's nominal public sector deficit, now at over 7% of GDP. The minister didn't provide details of the measures under consideration, but said the economic team is preparing a three-year austerity plan. He stressed the initiative for the program comes from Brazil, not the IMF. Malan said, with the fiscal adjustments, the government hopes to achieve a primary public accounts surplus of between 2.5% and 3.0% of GDP in 1999. The government is shooting for a primary surplus of between 0.5% and 1.0% of GDP in 1998.

To: Steve Fancy who wrote (8918)	10/8/1998 4:55:00 PM
From: Steve Fancy	Respond to of 22640

IMF Statement:Aims To Have Agreement Soon On Brazil Package Dow Jones Newswires WASHINGTON -- The International Monetary Fund and the Brazilian government Thursday issued a joint statement saying that they aim to reach agreement in the days ahead on a detailed program of fiscal and other macroeconomic and structural policies that could be supported financially by the IMF and the international community. The statement noted that the Brazilian authorities and the IMF had this week discussed the main lines of the government's proposed economic policy framework. In these discussions, the Brazil authorities "emphasized their firm commitments to their current exchange rate regime, the maintenance of a flexible interest rate policy, the non-imposition of any controls on capital outflows, the full service of the external and domestic public debt, and the continuation of their ongoing structural reform efforts," the statement said. The statement noted that the reform efforts covered the social security system, that tax system, the budgetary system and institutions, the financial system, the labor market and privatization, among others. "The IMF management fully supports these policies," the joint statement said. The Brazilian authorities have emphasized their determination to put rapidly in place a strong, front-loaded and sustained fiscal adjustment program, designed to stabilize the ratio of the public debt to GDP by the year 2000, the statement noted. "This will require the achievement as from 1999 of primary surpluses of the overall public sector in the range of 2.5-3.0% of GDP." The statement noted that the government is preparing policy initiatives to insure this outcome and "intends to announce them as soon as feasible during the month of October." At his press conference, IMF Managing Director Michel Camdessus said the IMF has been working very closely with the Brazilian administration and will be able to move very quickly once the government announces a program of reforms. He said the IMF has been assured that no currency controls would be introduced, and that "the IMF management fully supports" the efforts of the government. "We are very familiar with the Brazilian situation. Brazil is one of the countries that values very much the technical assessment of the IMF," said Camdessus. "We will be quick as soon as we have a formal, full-fledged programs in hand," said Camdessus. The official said he didn't want to "advance solutions" before the government announces new reforms to the people, and therefore didn't want to say much about what form assistance to Brazil might take. But the IMF official said that Brazil's funding gap isn't so great that the reforms themselves might be able to instill confidence. Therefore, IMF money could be offered to the government on a precautionary basis, and wouldn't have to be fully drawn down. "We have a here a situation of a country which is trying to protect itself against the volatility....if this strategy works as we expect, part of the financing pledge could be kept purely on a precautionary regard. We are not yet in a position to say," said Camdessus. Camdessus was asked about the role of private sector institutions in Brazil's eventual package, and he said the private sector should be encouraged to participate as a sign of support for the govenrment. "They have a golden opportunity to demonstrate they are committed to Brazil," he said.

To: Steve Fancy who wrote (8918)	10/8/1998 5:00:00 PM
From: Steve Fancy	Respond to of 22640

IMF seen as releasing package in 20 to 30 days - rpt São Paulo, 8 - Brazil's Finance Ministry Foreign Affairs secretary, Marcos Caramuru, announced while attending the International Monetary Fund (IMF) meetings in Washington, the coming out of the institution's official relief package to Brazil. "In the next 20 to 30 days we'll be seeing the Group of Seven industrialized nations (G-7) and other multilateral financial institutions acting toward avoiding international financial contagion over Brazil," Caramuru said. (By Cynthia Decloedt)

To: Steve Fancy who wrote (8918)	10/8/1998 5:02:00 PM
From: Steve Fancy	Respond to of 22640

Gov't plans to raise CPMF to 0.30%, Temer says - The government should propose that the Temporary Tax on Financial Transactions (CPMF - the so-called check tax) quota be readjusted by 50%, to 0.30% from the current 0.20%. The original idea was increase the tax quota to 0.25%. According to Chamber speaker, Michel Temer (PMDB-São Paulo), the "CPMF quota should stand at some 0.30%". The government has considered the alteration because the CPMF collection is seen to decline in 1999. This year, the tax is expected to add R$8bn to public coffers, a result which exceeds initial projections by R$2bn. Temer added that Cardoso also had said he wished the proceedings of a project which creates a new tax on big fortunes were resumed in Congress. Cardoso worked on the project at the time he was in the Senate. (O Estado de S. Paulo/ Jornal da Tarde/ Folha de S.Paulo/ Jornal do Brasil/ O Globo) Copom leaves interest rates unchanged - In the first meeting carried out after President Fernando Henrique Cardoso's re-election, the Central Bank (BC) Monetary Policy Committee (Copom) decided to leave current interest rates unchanged. Thus, the Central Bank Basic Rate (TBC) remains at 19%, while the Central Bank Assistance Rate stands at 49.75%. The rates are supposed to be in effect up until November 11, when the Copom will carry out a new meeting. (O Estado de S. Paulo) Gov't considers the creation of Production Ministry - President Fernando Henrique Cardoso confirmed yesterday that the government was considering the possibility of creating a superministry which would coordinate Brazil's production development. In addition to running the National Development Bank (BNDES) and Banco do Brasil, the agency would also combine the Ministry of Industry, Commerce and Tourism and that of Science and Technology. Communications minister, Luiz Carlos Mendonça de Barros, is the main supporter of the idea and the favorite name to control the new governmental department. The superministry would stimulate economy sectors which are less dependent on foreign capital and more dependent on internal financing. (O Estado de S. Paulo/ Jornal da Tarde/ Folha de S.Paulo) Petrobrás to sign contracts with private companies - The Brazilian Association for the Development of Base Industry (Abdib) president, José Augusto Marques, informed yesterday that state-owned oil company Petrobras would sign contracts with up to tree private companies in the next 10 days. According to Marques, Argentina-owned Yacimientos Petrolíferos Fiscales (YPF) and Perez Companc as well as US oil companies Texaco, Unocal and Coastal are among those with better chances to sign the first contracts. (O Estado de S. Paulo) São Paulo posts record abstention and null votes - The total of null (2,030,091) and blank votes (1,841,153) was a record figure in São Paulo. The combination of abstentions (3,850, 497), null and blank votes reaches one third of the state electorate, or 7,721,741 votes - which represent almost as many as all votes cast to Paulo Maluf (PPB) and Francisco Rossi (PDT), who were in the 1st and 4th places, respectively, in the state elections. (O Estado de S. Paulo/ Jornal da Tarde) (By Sergio Caldas)