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

To: Steve Fancy who wrote (9195)	10/27/1998 2:40:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Cardoso To Brief Congress Leaders Tue Before Speech Dow Jones Newswires BRASILIA -- President Fernando Henrique Cardoso will brief the chairmen of the Brazilian Senate and the Chamber of Deputies at 2000 GMT Tuesday on the full details of his fiscal emergency plan, Chamber chairman Michel Temer said Tuesday. The meeting is scheduled two hours before Cardoso's eagerly awaited television address to the nation, in which he will give the broad outlines of the austerity package. Meanwhile, presidential palace sources confirmed Cardoso will meet with government-allied congressional party leaders over breakfast on Wednesday to fill them in on the full list of the measures and to discuss their approval in Congress. Finance Ministry spokespersons said Tuesday that Finance Minister Pedro Malan will give a complete breakdown of the plan at a press conference scheduled after 1300 GMT Wednesday. The Malan press conference will be followed by separate briefings on all details of the plan by the executive secretary of the finance ministry, Pedro Parente, and his counterpart at the planning and budget ministry, Martus Tavares. Malan will formally submit the proposals to Congress on Thursday. As reported, economic advisors of the finance and the budget and planning ministries are putting the "last touches" to the plan Tuesday. The regular weekly meeting of the Fiscal Control Commission (CCF) set for Tuesday has been canceled, as most of the CCF members are the same advisors who are finalizing the austerity plan's proposals. -By William Vanvolsem; 5561-244-3095; wvanvolsem@ap.org

To: Steve Fancy who wrote (9195)	10/27/1998 2:42:00 PM
From: Steve Fancy	Respond to of 22640

Latin America's Delay In Tackling Y2K Could Prove Costly By WILLIAM HOKE Dow Jones Newswires SANTIAGO -- While El Nino's fickle currents and global financial turmoil have already made it a bad year for Latin America, some analysts say things could get even worse because the region's governments have been ignoring the ticking time bomb of the so-called Y2K computer problem. Y2K has its roots in a programming shortcut designed to save on once-expensive computer memory by identifying years using their last two digits only. That system works well - as long as the century doesn't change. Once it does, however, unmodified computers won't be able to distinguish the current day from the same date a century earlier. A large part of the corporate world was also slow to address the Y2K issue, but widespread publicity of the problem's seriousness has prompted many companies to implement crash programs to come to terms with it. Analysts say that while Y2K is no less serious a problem for Latin American governments, the level of awareness among many public officials has been disturbingly low. "At least at the beginning of this year, most Latin American countries weren't doing much serious about Y2K," said Juan-Francisco Roque, an economist based in Washington, with a computer consulting operation in Bolivia. Many observers doubt, however, that come Jan. 1, 2000, the machinery of state will come grinding to a sudden halt throughout Latin America. They add that while some disruption is inevitable, it should prove manageable. The extent of the disruption that will surface in the early days of the next century is still unclear, especially since few governments in the region have disclosed much hard information about the situation. But given the degree to which many Latin American governments involve themselves in their citizens' lives, their increasing dependence on computers, and their widespread reputation for inefficiency, the potential for problems with far-reaching consequences occurring can not be ignored. "One thing misleading governments in developing countries is they think that they won't be as affected," said Carlos Guedes, Deputy Controller of the Inter-American Development Bank. "They may not have the most modern systems, but what they have is basic and critical." Analysts say that regional governments already have a hard enough time keeping their fiscal deficits from ballooning out of sight without having to worry about the tax collection computers falling victim to Y2K as well. And even if they are able to keep the tax tap flowing, the social, political and economic consequences could be severe if governments suddenly found themselves unable to pay their employees, their pensioners or their suppliers. Systems failures at government hospitals could represent a major health hazard while disruptions at state-owned companies such as Mexican oil giant Pemex or Chilean copper producer Codelco could put a serious crimp into a country's economic growth rate as well as its fiscal revenue stream. Perhaps the area most fraught with danger is the region's regulated banking system. A breakdown there could erode public confidence still on the mend after years of hyperinflation. Back when money lost value to inflation as it sat in a bank, the typical Latin American worker was far more likely to spend his paycheck than he was to deposit it. Observers say central banks and regulators are well ahead of the rest of government in ensuring that their sector's computers are ship shape for the next century. "They're trying to prevent runs," said a Buenos Aires-based banker. "They want to make the results (of their Y2K efforts) public to persuade Joe Public that everything will be okay so he doesn't take his money out of the bank." Indeed, the banking sector could turn into a leading indicator of public confidence in governments' Y2K efforts. Analysts say if depositors start reaching the conclusion their funds might not be available after Jan. 1, 2000, large-scale withdrawals could begin well before that date. And while the Asian financial crisis is causing considerable concern today about whether Latin America will be able to pay off its foreign and domestic debt, Y2K failures could make it impossible for regional governments to meet bond payment schedules even if they do have the money available to do it. No matter how thorough governments might be in minimizing Y2K's potential for creating havoc, they are still only part of an interdependent web of public- and private-sector organizations in which the weakest link could cause a larger system to crack. "It's like a food chain," says economist Roque. "Everything's interconnected. If the phone company's not working, it doesn't matter if the banks are because you won't be able to send wire transfers to get money." Many analysts say Latin American governments have started addressing the Y2K problem too late to solve most of the problems by the turn of the century. The IDB's Guedes says inventorying and planning for Y2K consume 15% of the total time required for the job. Testing represents a whopping 60% of the total. That leaves just 25% of the time available for actually patching up the system. When Guedes factors out the weekdays between now and the year 2000, he finds there are only about 75 days left for correcting computer code. "There's no way!," Guedes said. He suggests many governments would be better off implementing a triage system whereby the most critical systems are worked on first and contingency plans established for continuing other important operations with a high likelihood of failure. Money and manpower are in equally short supply. Cash-strapped Latin American governments have little slack in their budgets for major computer-related outlays. Indeed, Brazil is expected to announce major budget cuts later this week. With that constraint in mind, Guedes told Dow Jones Newswires on Friday that the IDB's executive directors have authorized a Y2K line of credit of around $2 billion to assist regional governments in dealing with the problem. But money and time count for little if there's nobody available to do the work. Programmers are a precious - and increasingly scarce - commodity in Latin America. "The U.S. is taking whatever staff is available," Guedes said. "They're loosening visa requirements on programmers. Lots of Brazilians and Argentines are going there. It's a Year 2000 brain drain." -By William Hoke; 562-639-7895; whoke@ap.org

To: Steve Fancy who wrote (9195)	10/27/1998 2:45:00 PM
From: Steve Fancy	Respond to of 22640

Dlr/Brazil -2: Brazilian Traders Dismiss Speculation Dow Jones Newswires Dollar futures contracts in Brazil also rose Tuesday afternoon on the devaluation rumors that dealers said originated in the U.S. At 1720 GMT, November contracts had advanced 0.075% to BRL1.19 while December contracts were up 0.08% trading at BRL1.20. Brazilian dealers dismissed the speculation, saying that several large U.S. institutions had bet against the real in past weeks. "Malan has stated that exchange rate policy will not be altered," said one Sao Paulo dealer. "Institutions will lose heavily if Brazil doesn't break and these rumors are completely without foundation." Meanwhile, the dollar continued to spike higher from the support it found earlier. At 1728 GMT, it was at DEM1.6608. Ken Colli, economist for Latin America at Credit Lyonnais in New York, said he thought the market should "stay away from any type of reading on (Brazil) in the immediate hours leading up to Cardoso's announcement. "There is a lot of nervousness of impending devaluation, but this is normal because there are a lot of expectations," Colli said. Henry Willmore, senior economist at Barclays Capital in New York said the talk of devaluation in the market sparked a "muted version of flight to quality." Willmore said the talks "stopped the dollar in its tracks," capping further gains against the mark and yen. Traders also noted that U.S. stocks briefly reversed their earlier rally but subsequently rebounded again. After falling into negative territory, the Dow Jones Industrial Average was up 10 points at 1728 GMT. "There has been a very consistent line out of Brazil that they will not devalue and it would be foolhardy for them to do so before the announcement of the package" of financial assistance expected soon from multilateral international lenders, said Colli. But he added that if capital "outflows don't stop, they will be forced to include a devaluation. And I don't think the outflows will stop," Colli said. Willmore however warned that Brazil could make an announcement of an adjustment in the pace of the acceleration of the real peg to the dollar "at any time." Lisa Finstrom, senior currency analyst at Salomon Smith Barney, said the market seemed simply to be positioning in front of a key policy statement. She agreed the market talk had led to a selloff in U.S. stock and the Mexican peso. "People have been worrying about Brazil for many months," said Finstrom, "and clearly when we are hours away from the announcement of a major fiscal plan, the speculation is a little more intense." -By Michael Casey and Marianne Sullivan; 201-983-4384

To: Steve Fancy who wrote (9195)	10/27/1998 2:47:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Ctrl Bk: No Changes In Exchange Rate Policy-Estado Dow Jones Newswires SAO PAULO -- Amid market rumors that Brazil is set to devalue its currency, the central bank on Tuesday said it has no plans to alter its foreign exchange policy, the Estado news agency reported. Central Bank International Affairs Director Demosthenes Madureira Pinho Neto confirmed to Dow Jones Newswires through a spokesman that he sought to "squash rumors that have circulated Tuesday, mostly generated by the international press" and that no exchange rate changes are imminent. Brazil has a long-standing policy of promoting mini- devaluations of the real every two to five working days. The policy results in an annual devaluation of around 7%. Talk mounted that Brazil planned to devalue its currency after two large U.S. investment banks were seen selling a total of 2,000 contracts in the November real futures contract Tuesday mid-morning. Market participants and analysts were also quick to dispel speculation that a devaluation would accompany the fiscal austerity measures slated to be unveiled later Tuesday by President Fernando Henrique Cardoso. "We are confident that there is no truth to the rumor. We've talked to U.S. banks and to the IMF (International Monetary Fund) and no one believes that it going to be part of the fiscal package," said Pravin Banker, a portfolio manager at King Capital Limited said. Meanwhile, demonstrating how sensitive investors are, the head of Citigroup's Latin American research sent an e-mail shortly after the rumor hit the Street, detailing why such a move was unlikely. "Market rumors are suggesting a 10% devaluation is imminent in Brazil. We deem this as highly unlikely," wrote Joe Petry. Petry said that Brazil's fiscal problem would be complicated rather than helped by a devaluation. "The structure of Brazil's public domestic debt would be greatly worsened as the exchange rate uncertainty would likely lead to increased interest rates with negative consequences for the $51 billion reals in domestic dollar-indexed debt," he said. Petry added that the $230 billion external debt of Brazil would also be negatively impacted by a devaluation of the country's currency. "Brazilian policy authorities are well aware of these calculations," the Citigroup economist said. -By Carol S. Remond; 201-938-2074; and Stephen Wisnefski; (5511) 813-1988