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

To: Steve Fancy who wrote (8994)	10/14/1998 4:08:00 PM
From: Steve Fancy	Read Replies (8) \| Respond to of 22640

Brazil's real slips as mkts seen losing $400 mln Reuters, Wednesday, October 14, 1998 at 15:29 SAO PAULO, Oct 14 (Reuters) - Brazil's currency closed slightly weaker against the dollar on expectations that another $400 million will leave the country's foreign exchange markets on Wednesday, traders said. The real slipped 0.04 percent to 1.1880 to the dollar in the commercial forex market. Brazil was seen losing another $400 million through its forex markets, up from initial expectations of $300 million, traders said. Investors have yanked some $30 billion out of Brazil's forex markets since the beginning of August after Russia devalued its currency, draining Brazil's reserves and putting pressure on the government to devalue its currency. A sharp increase in interest rates helped slow the capital flight but failed to stop it. As of 1715 local/1915 GMT, some $150 million had left Brazil's commercial forex markets, according to the Central Bank, while another $70 million had left through the floating market, traders said. The real weakened 0.08 percent in the floating market to 1.1805 reais against the dollar and it was unchanged in the parallel market at 1.300 reais to the dollar. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8994)	10/14/1998 6:42:00 PM
From: Steve Fancy	Respond to of 22640

FOCUS-Brazil readies fiscal plan to save economy Reuters, Wednesday, October 14, 1998 at 16:12 By William Schomberg BRASILIA, Oct 14 (Reuters) - Brazil has been promising fiscal reform to investors for years, but economists said on Wednesday the nation may now have just one last chance to cut the huge budget deficit at the root of its economic woes. Government officials have been working around the clock on a hotly awaited fiscal plan to save or raise at least $19.5 billion next year and keep Latin America's biggest economy from following Asia and Russia into a devastating currency devaluation. The blueprint is expected to be shown to President Fernando Henrique Cardoso before he travels to Portugal on Friday. Although hard details may not be announced until after a second round of state-level elections Oct. 25, markets in Brazil and around the world are anxiously waiting to see whether the plan -- unlike previous fiscal drives -- really has teeth. Should it disappoint, economists warned that Brazil's already tattered credibility among investors could go to the wind. "If the fiscal adjustment plan doesn't work, we're looking at a worst-case scenario with an uncontrollable devaluation," said Constantin Jancso of MCM Consultores in Sao Paulo. Battered by $30 billion dollar outflows since mid-August, Brazil has little choice but to make painful cuts to an already skeleton-level budget, raise taxes and sack civil servants to adapt the public sector to the world's meaner financial climate. Economists say Brazil has several other belt-tightening options (see accompanying story) to meet a tough primary budget surplus target of between 2.5 and 3 percent of gross domestic product agreed last week with the International Monetary Fund. The IMF is widely expected to announce a multibillion-dollar credit line for Brazil once the austerity plan is unveiled. Brazil is struggling just to break even in 1998 in its primary account, the narrowest measure of government spending and income which does not include the country's whopping debt costs, expected to pass $60 billion in 1998. Only by posting a primary surplus can the country free up cash to begin reducing its roughly $300 billion debt stockpile and address its wider, nominal public sector budget deficit -- including debt costs -- now a towering 7 percent of GDP. Many investors fear the deficit is simply too big to be covered by increasingly scarce foreign dollars, raising the dreaded prospect of a debt default. "It's simple; we either save or we simply can't afford to pay our debt," said an analyst with an investment bank in Rio de Janeiro who asked not to be named. "Let's see if the government will really bite the bullet this time." Last year, Cardoso's economic team unveiled what they said was an $18 billion fiscal program to settle markets at the onset of Asia's financial crisis. While the tax increases included in the program were implemented, much of the promised cuts were quietly dropped. The deficit has also continued to grow thanks to slow progress in Congress on reforms of the social security system and the civil service. Now markets are in no mood for a compromise. "There is a perception...even within the government that Brazil's public sector spends too much and too wastefully," said Mauro Schneider, chief economist with ING Barings in Sao Paulo. "Seeing as the problems are on the spending side, any plan has to start there," he said. william.schomberg@reuters.com)) Copyright 1998, Reuters News Service