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

To: Steve Fancy who wrote (9099)	10/22/1998 4:07:00 PM
From: Steve Fancy	Respond to of 22640

RPT: Brazil's State Polls Sunday Seen As Crucial For Cardoso By WILLIAM VANVOLSEM Dow Jones Newswires BRASILIA -- As the world awaits news on measures to bring Brazil back from the brink of financial collapse, attention now turns to next Sunday's run-off elections for 13 state governors. The outcome of the polls will determine how tough negotiations will be and how much political bargaining will be necessary to push through long-delayed reforms and an eagerly-awaited fiscal plan, analysts say. And the ultimate success of many of the changes that President Fernando Henrique Cardoso seeks to push through depends on the performance of the powerful state governors. The latest opinion polls indicate that gubernatorial candidates endorsed by Cardoso stand a slim chance of clinching victory in the country's leading states and the federal capital district. "These elections are very important for Cardoso as he desperately needs the full support of state governments to implement fiscal measures and savings and guarantee the votes that local governors command in Congress," said Carlos Lopes, a political consultant with Santa Fe Ideias in Brasilia. Apart from that, Lopes points out, it's the state governments with their reckless overspending and chronic deficits that make Brazil's public accounts so ugly. Brazil is running a budget deficit of 7% of gross domestic product. David Fleischer, a political science professor at the University of Brasilia, agrees that Cardoso might have to skipper a turbulent course if antagonistic governors win in states such as Sao Paulo, Minas Gerais and Rio Grande do Sul. "Governors have far more power and a direct hold on their states than the president has over the whole country. Their influence and political weight should not be underestimated," Fleischer said. Fleischer says it's clear that Cardoso postponed announcement of the multi-year fiscal emergency measures until next week because of the gubernatorial elections. "It just shows how much importance he attaches to these elections and the role of the future governors. I'm sure he will inform the elected governors of the measures first before it's made public or submitted to Congress," he said. The proposals were handed to Cardoso by Finance Minister Pedro Malan on Tuesday, but will be divulged only mid-next week. "The elected governors' role in the success of the plan is crucial as they will have to close the tap and make the cuts," said Lopes. "It is therefore extremely important with whom Cardoso will have to sit at the negotiating table on a state level to implement the measures," he added. Fourteen governors were elected in a first-round poll held Oct. 4, the same day Cardoso was re-elected. But a second round run-off vote is needed in 12 other states and the federal district of Brasilia. Most attention will go to the four most developed states that have the largest GDP contribution in the country. And it's exactly there where things don't look particularly bright for Cardoso. A poll published Wednesday by Datafolha shows that the fight for Brazil's prime governorship, that of mighty Sao Paulo state, will be a cliff-hanger: Cardoso's candidate Mario Covas, the outgoing governor, is leading the race with only 45% against 41% for populist Paulo Salim Maluf, a former mayor of Sao Paulo city. Despite Covas having overtaken Maluf since the previous poll, the Datafolha poll has a margin of error of between 2% and 3%, which puts the two neck-and-neck. Fleischer reckons Maluf still stands a chance, but also thinks that if he wins he will not wage a frontal opposition to Cardoso. "He is a smart plotter and more than likely he will sit down at the negotiating table and bargain for special favors for his state, where unemployment is running record levels," Fleischer said. Research group Dieese puts unemployment in the Sao Paulo metropolitan area, the only region in the state with official data available, at 18%. According to Fleischer, Maluf could pick up a Sao Paulo state in good fiscal shape - "ironically thanks to a good administration by Covas". Covas is a darling of the economic team and one of Cardoso's favorites for having cleaned up state accounts and privatizing state energy sector assets. "But there was not much else he could do during his term - nor was there any money to do it if he wanted to," Fleischer said. Lopes adds that this is exactly where Maluf might score with the general voting public. "He's known as a doer with a penchant for spectacular and visible public works such as super-highways and housing projects - never mind the books," the analyst said. The peculiarities of regional Brazilian politics also come to the fore in Sao Paulo, where defeated leftist Workers' Party (PT) candidate Marta Suplicy publicly expressed her support for Covas in the run-off vote, saying she would place her mark for the Cardoso-endorsed candidate. Things look a bit more grim for Cardoso in Minas Gerais, Brazil's second most populous and industrialized state. There the Datafolha poll gives former President Itamar Franco a solid 52% to 36% lead over Cardoso-sponsored incumbent governor Eduardo Azeredo. Both analysts say that the former president will be "a thorn in the side of Cardoso", as Fleischer puts it, or "a nuisance" in the words of Lopes. Also in Rio Grande do Sul, Brazil's southernmost state, Cardoso's man is lagging in the polls: leftist PT candidate Olivio Dutra leads with 50% against 43% for incumbent Antonio Britto. But, Dutra isn't regarded as a strong force in national politics, although he's expected to put up uncompromising opposition to Cardoso. In Rio de Janeiro, the traditionally "anti-anybody-who's-in-power" state, leftist Anthony Garotinho also looks like he will pick the honors with 56% against 36% for former Rio city mayor Cesar Maia of the Cardoso camp. But Garotinho isn't a militant oppositionist and he will probably strike a working compromise with the central government. In Brasilia, Cardoso-endorsed Joaquim Roriz is struggling with incumbent PT governor Cristovam Buarque (48% vs 46%), openly supported by Cardoso allies, in the race for this prestigious federal district top post. -By William Vanvolsem; (5561) 244 3095; wvanvolsem@ap.org

To: Steve Fancy who wrote (9099)	10/22/1998 4:09:00 PM
From: Steve Fancy	Respond to of 22640

Fischer: IMF Willing To Put Up $15B For Brazil - Agency Dow Jones Newswires BUENOS AIRES -- The International Monetary Fund is willing to put up $15 billion of the estimated $30-billion international aid package being sought by Brazil, IMF Deputy Managing Director Stanley Fischer said Thursday, local news agency Diarios y Noticias reported. "The $30-billion figure is what Brazil presented," Fischer said, adding: "The amount that we are willing to provide is $15 billion." Fischer, who made his comments after addressing an economic conference in Buenos Aires, said he expected an accord to be reached on the Brazilian aid package by the end of this week or early next week. "The reason that the agreement still isn't decided is because it has to be known with precision what the government is going to do and how," he said. "After that, we will be able to define how much financing will be necessary and who can provide it." Fischer couldn't be reached for comment. -By Christopher Chazin; 541-315-1690; cchazin@ap.org

To: Steve Fancy who wrote (9099)	10/22/1998 4:22:00 PM
From: Steve Fancy	Respond to of 22640

Latam financial situation calming -- IMF's Mussa Reuters, Thursday, October 22, 1998 at 12:44 WASHINGTON, Oct 22 (Reuters) - The financial situation in Latam America, difficult since mid-July, now appears to be calming down, International Monetary Fund chief economist Michael Mussa said on Thursday. "There is some evidence that this is calming down a bit, but there's a way to go," Mussa told reporters during an economic conference at the Cato Institute. The IMF is currently preparing an IMF lending package for Brazil. 898-8383, washington.economic.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9099)	10/22/1998 4:25:00 PM
From: Steve Fancy	Respond to of 22640

Brazil BNDES shifts financing methods amid turmoil Reuters, Thursday, October 22, 1998 at 15:13 SAO PAULO, Oct 22 (Reuters) - In the face of a global credit crunch, Brazil's National Development Bank said Thursday it is rethinking how it can help companies finance their investments. BNDES, as the federal institution is known, has shaved $1 billion off its initial 1998 lending budget of $18 billion and has ruled out trying to raise any more money in international markets this year. "We've closed the chapter on tapping resources this year," said Ivone Hiromi Saraiva, superintendent of infrastructure projects at BNDES. "We might go back to the market at the beginning of next year." As a result, BNDES is exploring new ways of helping Brazilian industry finance crucial investments for the country's development. The telecommunications industry will need $60 billion, the oil industry $80 billion and the electricity sector $30 billion to make its investments over the next five years, according to the BNDES. "BNDES knows it can't count on the international markets the way it used to," Saraiva said. The bank plans to shift away from its generous direct financing and move toward backing loans for companies with guarantees, co-signing and leveraging facilities, she said. "When the BNDES gets in to help facilitate loans, the company is going to be seen with the backing of the BNDES and the project will be viewed more positively," she said. Despite the credit squeeze, BNDES tentatively plans to earmark another $18 billion for backing investments projects in 1999. shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service