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

To: posjim who wrote (9155)	10/25/1998 5:16:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Fiscal Austerity Plan To Save 30 Bln Reals - Veja Dow Jones Newswires RIO DE JANEIRO (AP)--Brazil's much-awaited fiscal austerity plan includes spending cuts and tax increases expected to save 30 billion reals (BRR) ($1=BRR1.18) next year, the nation's leading newsweekly Veja said. Details of the plan will be officially disclosed Tuesday, government sources said. But Veja claimed it had access to the 52-page program and published details in its edition circulating over the weekend. The reforms will touch controversial areas such as social security and labor laws but do not include additional import taxes, the magazine said. According to Veja, the measures include: - Sweeping budget cuts of up to BRR10 billion, mainly in the education and health ministries. - Increasing the tax on financial transactions to 0.35% from the current 0.2%. The increase will generate some BRR14 billion in 1999, up from the current BRR 8 billion. - The extension until 2001 of the Fiscal Stabilization Plan, which provides about 20% of its budget funds. It allows the federal government to use the money it normally distributes to the states. - A gradual increase in social security payments by all public servants, from 11% to 16%. Veja said the plan already has been approved by the International Monetary Fund, which said last week it is prepared to offer $15 billion to help bolster the country's monetary reserves. Brazil has been hurt badly by the turmoil affecting financial markets worldwide. The country's international reserves have fallen to $45 billion, from $70 billion at the end of July.

To: posjim who wrote (9155)	10/25/1998 6:03:00 PM
From: Steve Fancy	Read Replies (4) \| Respond to of 22640

Brazil's Cardoso boosted as ally wins state vote Reuters, Sunday, October 25, 1998 at 17:45 (Updates with preliminary results, comment) By Jeremy Smith RIO DE JANEIRO, Oct 25 (Reuters) - An ally of Brazil's President Fernando Henrique Cardoso won the governor's race in the key state of Sao Paulo on Sunday, boosting Cardoso in his battle to shore up the economy, preliminary results showed. But Cardoso supporters lost in other important states, such as Rio de Janeiro and Minas Gerais, and analysts said the victors there could prove to be political thorns in his side. Cardoso, reelected as president on Oct. 4, was keen to secure an ally in Sao Paulo as he prepares for political tussles that include an international loan package and harsh fiscal measures to slash a gaping budget deficit. The elections were widely viewed as determining the extent of Cardoso's power in his second term and his ability to tackle the financial crisis in Latin America's largest economy. Brazil's state governors enjoy wide spending and taxing powers and influence the way their states' delegations vote in Congress. Their nationwide impact is most evident in Sao Paulo, Brazil's wealthiest state, with a population of 30 million and a $300 billion economy that is nearly as large as Argentina's. Results issued so far showed that Mario Covas, a social democrat and longtime friend of Cardoso, was reelected as governor in Sao Paulo, with 57 percent of the vote to 43 percent for right-wing populist Paulo Maluf, with 15 percent of the ballots counted. Covas, 68, has won praise for putting Sao Paulo's financial house in order by restructuring a huge debt, dismissing more than 100,000 civil servants and selling inefficient businesses. Cardoso considered the Sao Paulo race so important that he delayed announcing sweeping tax hikes and budget cuts to avoid hampering Covas' chances. The formal unveiling of a $30 billion IMF-based loan package also had to wait. Political analysts said the Covas victory would bolster Cardoso's party, the PSDB, in Congress -- which will soon vote on an array of austerity measures that are the basis for the loan package. "The PSDB is strengthened within the governing coalition. It maintains control of the main state of the country, the richest and most populated," said commentator Franklin Martins on Globo TV network. But Cardoso could face problems from former President Itamar Franco, a critic of Cardoso's free-market economic policies who looked to have won as governor of Minas Gerais. Although only 5 percent of the vote had been counted, Franco led incumbent Gov. Eduardo Azevedo, a member of Cardoso's party, by 58 percent to 42 percent. "One result which is definitely negative for Fernando Henrique is the victory of Itamar Franco in Minas Gerais. The other results are either neutral or convenient," said analyst Murillo Aragao, the head of consulting firm Arko Advice. "However, the result is very positive in Sao Paulo for the PSDB and for Fernando Henrique," he told Reuters. Franco, who as president appointed Cardoso finance minister, claims to be the father of the Real Plan, which launched Brazil's new currency after years of manic inflation, although many see Cardoso as the plan's architect. Leftists were winning the governorships in Rio de Janeiro, the Federal District, which includes Brasilia, and the southern state of Rio Grande do Sul. In Rio, where 35 percent of the votes had been counted, left-winger Anthony Garotinho was thrashing conservative former city mayor Cesar Maia by 56 percent to 44 percent. In the Federal District, Workers' Party (PT) candidate Cristovam Buarque led conservative former Gov. Joaquim Roriz by 51 percent to 49 percent, with 35 percent of the votes counted. With 45 percent of the ballots counted in Rio Grande do Sul, which borders Uruguay, PT candidate Olivio Dutra had 55 percent of the vote to 45 percent for Antonio Britto of the Brazilian Democratic Movement Party, which is allied to Cardoso. Almost 65 million Brazilians out of a total electorate of 106 million were expected to have voted on Sunday to choose 13 governors. Elections in Brazil's 14 other states were settled in the first round of voting on Oct. 4. Copyright 1998, Reuters News Service