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

To: Steve Fancy who wrote (9217)	10/28/1998 10:48:00 AM
From: Steve Fancy	Respond to of 22640

Brazil unveils austerity plan to protect economy Reuters, Wednesday, October 28, 1998 at 08:09 BRASILIA, Oct 28 (Reuters) - Brazil unveiled on Wednesday a 28 billion reais ($23.5 billion) austerity plan of budget cuts and tax hikes to shore up Latin America's largest economy and stave off a punishing currency devaluation. The long-awaited plan, released by the Finance Ministry, was expected to pave the way for an estimated $30 billion credit line led by the International Monetary Fund. Finance Minister Pedro Malan was scheduled to discuss the 30-page plan with the media at 0830 EST (1330 GMT). Among other things, the plan calls on civil servants to pay more out of their salaries to the pension system. President Fernando Henrique Cardoso gave a broad outline of the plan in a nationally televised address late on Tuesday, asking Brazilians to unite around the tough measures and "think of the country's highest interests." The fiscal adjustment program is widely seen as essential to restoring investor faith in Brazil's battered economy, the world's eighth largest. The country has lost $30 billion to capital flight since Russia's devaluation in mid-August shook confidence in emerging markets. Much of the plan needs approval by Brazil's Congress, where Cardoso must seek support from a fractious alliance of political parties. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9217)	10/28/1998 10:50:00 AM
From: Steve Fancy	Respond to of 22640

Brazil's Bovespa to open one hour late at 1400 gmt Reuters, Wednesday, October 28, 1998 at 08:14 SAO PAULO, Oct 28 (Reuters) - Brazil's benchmark stock exchange will open one hour late on Wednesday at 1200 local/1400 GMT, after Finance Minister Pedro Malan presents the government's fiscal plan, an exchange spokeswoman said. The Bovespa stock exchange will open following Malan's 1130 local/1330 GMT address and will close normally at 1800 local/2000 GMT. Trading will not be suspended for the traditional lunch hour. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9217)	10/28/1998 10:51:00 AM
From: Steve Fancy	Respond to of 22640

Brazil plan to raise CPMF tax, pension payments Reuters, Wednesday, October 28, 1998 at 08:32 SAO PAULO, Oct 28 (Reuters) - Brazil plans to raise the financial transactions tax known as the CPMF to 0.38 percent from 0.2 percent in 1999 as part of a 28 billion reais austerity plan the government presented on Wednesday. The CPMF tax will fall back to 0.3 percent in 2000 and 2001, according to the three-year plan presented by the Finance Ministry. Brazil also plans to raise the Cofins pension contribution that companies pay to three percent of revenue from two percent. For the first time, banks and financial institutions will also be required to pay the contribution, according to the plan. All civil servants, including retired workers, will have to pay a minimum 11 percent pension contribution. Workers earning over 1,200 reais per month will be charged an additional nine percent of their salary. Finance Minister Pedro Malan will present the belt- tightening measures to the media at 11:30 a.m. (1330 GMT). The ministry's Pedro Parente will answer questions about the measures at 1:30 p.m. (1530 GMT). Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9217)	10/28/1998 10:52:00 AM
From: Steve Fancy	Respond to of 22640

Brazil central govt to bear brunt of budget cuts Reuters, Wednesday, October 28, 1998 at 09:00 SAO PAULO, Oct 28 (Reuters) - Brazil's central government said it will bear the lion's share of spending cuts in the fiscal stabilization plan unveiled Wednesday, trimming its 1999 budget by 8.7 billion reais ($7.48 billion). With those cuts, the central government aims to achieve a 1.8 percent primary budget surplus in 1999, paving the way for a planned 2.6 percent surplus for the entire public sector. The central government will shave an additional 8.8 billion reais off its budget in 2000 and 9.0 billion reais in 2001, according to the fiscal plan. With the fiscal clamp-down for next year, the government said it expects gross domestic product to contract by 1 percent after estimated growth of 0.5 percent in 1998. But GDP will rebound to 3 percent in 2000 and 4 percent in 2001 despite the continued fiscal restraint outlined in the three-year plan. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9217)	10/28/1998 10:53:00 AM
From: Steve Fancy	Respond to of 22640

Little initial market impact seen from Brazil plan Reuters, Wednesday, October 28, 1998 at 09:33 By Ian Simpson NEW YORK, Oct 28 (Reuters) - Brazil's $23.5 billion austerity package aimed at shoring up Latin America's biggest economy likely will have little initial effect on markets, analysts and traders said Wednesday. They told Reuters the package largely matched investors' forecasts while concerns remained about congressional approval. The biggest question marks were raised about an increase in corporate social security taxes and in a tax on financial transactions. "People had analyzed the situation to death. I guess there could be some relief but this is not a turning point," said Ronald Ratcliffe, Latin American economist at SG Cowen. Jane Heap, Latin American equity strategist at Deutsche Bank Securities, said she was concerned that the package apparently was weighted toward tax increases instead of budget cuts. "All in all, it's in line" with expectations, she said. "The risk is that people will come away a little bit more pessimistic than before." Brazil's Finance Ministry announced the long-awaited austerity plan Wednesday to save $23.5 billion next year through tax hikes, budget cuts and other measures. The plan is aimed at pulling the world's eighth-biggest economy back from the brink of collapse and protect it from financial turmoil that has ravaged emerging markets around the world. The program is designed to close a budget shortfall of more than 7 percent of gross domestic product. It includes a previously announced $7.3 billion cut in the federal budget for 1999. It also features a boost in a financial transactions tax to 0.38 percent from 0.2 percent, a move expected to bring in more than $6 billion next year. Brazil also plans to raise the Cofins pension contribution that companies pay to 3 from 2 percent. The program foresees a contraction of 1 percent in Brazil's economy next year against growth of 0.5 percent in 1998. In an early sign of reaction to the package, Brazilian telephone issue Telebras SA (SAO:TELB4) (NYSE:TBR), a bellwether Latin American ADR, was down in pre-opening trade at 73-1/4 from a close of 74-8/16. "The bottom line is that prices right now reflect what's already in the news," a trader said. "The details were well enough telegraphed that people have made their positions accordingly." Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9217)	10/28/1998 10:56:00 AM
From: Steve Fancy	Respond to of 22640

Brazil expects to halve interest rates by mid-1999 Reuters, Wednesday, October 28, 1998 at 09:37 BRASILIA, Oct 28 (Reuters) - Brazil's government expects the key overnight interest rate to fall to 22 percent by mid-1999 from the current 42.4 percent, according to its three-year fiscal plan presented on Wednesday. The rate, known as the SELIC, will drop to 17 percent by mid-2000 and to below 15 percent by mid-2001, according to the plan. The SELIC stood at around 19 percent in August before financial turmoil in Russia sent investors running from emerging markets and prompted Brazil to double rates to stem large capital outflows. Brazil suffered $30 billion in capital outflows between August and September. In October the capital outflows subsided as a result of higher interest rates and large external direct investments into Brazil. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9217)	10/28/1998 10:58:00 AM
From: Steve Fancy	Respond to of 22640

Brazil plans to save and raise 28 bln reais in 99 Reuters, Wednesday, October 28, 1998 at 09:47 BRASILIA, Oct 28 (Reuters) - Brazil aims to achieve 28 billion reais worth of spending cuts and increases in taxes and pension contributions in 1999 as part of its bid to cut the bloated fiscal deficit, the Finance Ministry said Wednesday. The government hopes to raise and save 33.7 billion reais in 2000 and another 38 billion in 2001 as part of its three-year fiscal plan. In 1999, the government plans to cut spending by 8.67 billion reais and cut the social security deficit by 2.55 billion reais, it said in a 30-page document detailing the fiscal measures presented by the Finance Ministry. The government hopes to raise 13.27 billion reais with tax increases and hopes to save another 3.53 billion reais with its tax, pension and other reform proposals. In 2000, spending cuts and savings from reforms should total 8.84 billion reais and 9.21 billion reais. The social security deficit should shrink by 4.30 billion reais and tax increases should raise 11.4 billion reais for the government. In 2001, the government plans to cut spending by 9.02 billion reais, save 12.58 billion reais from structural reforms and reduce the social security deficit by 4.43 billion raises. Brazil should raise 11.96 billion reais from tax increases. In order to post the total primary budget surplus targets agreed upon with the International Monetary Fund, the central government needs to achieve a primary budget surplus of 1.8 percent of gross domestic product in 1999, 2 percent in 2000 and 2.3 percent in 2001, the document said. The central government said it actually expects the primary budget surplus to be on target in 1999 at 1.8 percent of GDP, over target in 2000 at 2.8 percent of GDP and under target at 2.16 percent in 2001. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9217)	10/28/1998 10:59:00 AM
From: Steve Fancy	Respond to of 22640

Brazil Malan's Speech Delayed; Briefing Congressmen Now Dow Jones Newswires BRASILIA -- Brazilian Finance Minister Pedro Malan's presentation on the multi-year fiscal austerity plan, slated for 1330 GMT Wednesday, has been delayed as he meets with members of Congress, a Finance Ministry spokesman said. Joao Arnolfo Carvalho said that the briefing on the measures hasn't been canceled but will be delayed for "a few minutes." Malan met earlier Wednesday with President Fernando Henrique Cardoso and other cabinet members. A summary of the austrity measures, which aim to save the government 28 billion reals in 1999, was released earlier on the Finance Ministry's web site.

To: Steve Fancy who wrote (9217)	10/28/1998 11:00:00 AM
From: Steve Fancy	Respond to of 22640

Emerging Mkts ADRs: Volatile, Indifferent To Brazil Package Dow Jones Newswires NEW YORK -- Emerging market shares trading as American depositary receipts were tracking a volatile Dow Jones Industrial Average early Wednesday, dealers said. A much-awaited fiscal package from Brazil, which was finally spelt-out Wednesday morning, failed to excite investors. "There was almost a lack of reaction, most of these details had made their way out to the market," a dealer said. "Now the tough part is getting the measures through Congress. That's where the rubber meets the road." "There was nothing new," a trader said. "The government was supporting the market (in Brazil) while (Finance Minister Pedro) Malan spoke, but then they withdrew and things turned down again." Market participants said that the tone of the day will be low volume in volatile trading, as much of the activity rests in the hands of short-term investors. "There isn't much room to collapse. Foreigners don't have many shares to sell," the dealer said. At 1529 GMT, as the DJIA was slightly higher, advancing 26.78 points to 8393.36, Brazilian bellwether Telebras rose 3/16 to $74 11/16, and bank Unibanco slid 2% to $16 1/8. Mexican ADRs are underperforming other Latin issues Wednesday. Dealers said that they are "catching-down" with the rest of the region, which had been driven lower in the past couple of sessions. "They were lagging a bit," a dealer said. Traders said it was hard to focus on a flurry of earnings reports from Mexico in light of uncertainties on the macroeconomic front. Most results reported so far have been in line with expectations, they said. "Earnings are not having the effect they would normally have," a trader said. "Brazil is driving all of Latin America, so earnings are not high on the radar screen." One stock raising concern is Grupo Financiero Serfin, a dealer said. "Earnings weren't that bad, but the problem there is capitalization." At 1535 GMT, Serfin was 9% lower at 5/8. Bellwether Telmex held on in positive territory, up 1/2 to $50 15/16. -By Margarita Palatnik; 201-938-2226; margarita.palatnik@cor.dowjones.com

To: Steve Fancy who wrote (9217)	10/28/1998 11:03:00 AM
From: Steve Fancy	Respond to of 22640

Brazil's Malan Begins Presentation On Fiscal Plan Dow Jones Newswires SAO PAULO -- In a wide-ranging 55-minute presentation, Brazilian Finance Minister Pedro Malan Wednesday laid out the framework of the government's fiscal stability program for the next three years. The government hopes to save 28 billion reals (BRR) ($1=BRR1.18) in 1999 alone through a series of spending cuts and tax increases, which need to be approved in Congress. Malan said the plan isn't of a transitory nature, but sets out to establish the structural conditions necessary to guarantee long-term fiscal stability. "This has always been our objective," Malan said. "What has changed now is the time frame," he added, citing urgency brought on by turmoil on international markets. Brazil's international reserves have tumbled to $45 billion, from $70 billion at the end of July, as investors fled following Russia's default and devaluation last month. Malan said the government will "guarantee" the purchasing power of the real and reiterated that the country's exchange policy will remain untouched. On Tuesday, a big sell-off of real futures at the Chicago Board of Trade sparked rumors that a devaluation might be in store for the real as a parallel measure to the fiscal stability plan. Malan said he hopes for a shift to a "culture" that respects budgetary limitations at all levels of government, a culture which is a given in developed countries. "There is no magic; more spending is only possible with higher taxes or more debt and all the implications this higher debt will bring," he said. The finance minister said many governors and mayors around the country agree that it is time for greater fiscal responsibility. "I am very satisfied that 24 governors have made a commitment...heading toward a (new paradigm) of fiscal responsibility, which means in fact abiding by budgetary restrictions and respecting the taxpayer." In recent speeches, President Fernando Henrique Cardoso has placed much of the burden for trimming Brazil's public deficit - of 7% of gross domestic product - on states and municipalities.

To: Steve Fancy who wrote (9217)	10/28/1998 11:12:00 AM
From: Steve Fancy	Respond to of 22640

Brazil urges to reduce interest rates, Covas says São Paulo, 28 - During an interview to a major Brazilian TV, São Paulo's re-elected governor and President Fernando Henrique Cardoso's mediator in the fiscal austerity program discussions, see related story, Mario Covas, said he was very much pleased when the president declared yesterday, during the official announcement of Brazil's fiscal austerity program guidelines, see related story, a likely reduction in interest rates. "High interest rates are terribly harmful, and it is necessary to reduce them as soon as possible," Covas said. The governor affirmed that the reduction is key to São Paulo, Brazil's largest state, because that would mean the increase in jobs, larger investments in the social area as well as economic growth. "It is necessary that the pace of the reduction in interest rates speeds up in comparison to what has been done so far," Cardoso's mediator explained, "so as we can retake our economic growth." (By Melchiades Cunha Júnior)

To: Steve Fancy who wrote (9217)	10/28/1998 11:13:00 AM
From: Steve Fancy	Respond to of 22640

Forex posts a US$337m deficit on Tuesday São Paulo, 28 - Brazil's forex market posted a US$337m deficit on Tuesday. The result decreased the month's accumulated positive balance to US$1.888bn from US$2.225bn. During the session, financial inflow reached US$246m, below outflow which stood at US$539m. In the trade account, exports reached US$163m, against imports of US$208m. The floating dollar was negative at US$106m, boosting the month's negative result to US$2.364bn from US$2.258bn. (By Adriana Carvalho)

To: Steve Fancy who wrote (9217)	10/28/1998 11:14:00 AM
From: Steve Fancy	Respond to of 22640

SP governor Covas to brigde Cardoso and the opposition São Paulo, 28 - São Paulo re-elected governor, Mário Covas (PSDB), accepted to be the mediator between President Fernando Henrique Cardoso and the state governors in the fiscal austerity program discussions. In an interview, Covas defended once again a higher control of federal accounts. However, he said he did not know whether the states would be affected by the measures to be announced today. Covas also defended further talks between the government and the opposition and offered himself to help make that possible. Cardoso has a meeting scheduled with Covas for Friday. (O Estado de S. Paulo/ Jornal da Tarde)

To: Steve Fancy who wrote (9217)	10/28/1998 11:15:00 AM
From: Steve Fancy	Read Replies (5) \| Respond to of 22640

Brazil's Congress to resume pension voting - Malan Reuters, Wednesday, October 28, 1998 at 10:11 BRASILIA, Oct 28 (Reuters) - Brazil's Finance Minister Pedro Malan said on Wednesday that he expects Congress to vote on outstanding social security reforms beginning next week. During a presentation of the government's three-year fiscal plan, Malan said the government also plans to send a tax reform bill to Congress in coming weeks. Malan presented to the media the government's fiscal adjustment plan, aimed at saving and raising 28 billion reais next year. In 1999, Brazil plans to raise 13.2 billion reais from an increase in taxes and save some 15 billion reais from spending cuts, he said. The ministry's Pedro Parente is slated to respond to questions about the measures at 1:30 p.m. (1530 gmt). Malan said the government will prepare a fiscal responsibility law by Dec. 4 in a bid to institutionalize spending controls. The government also plans to send legislation to Congress soon enabling the administrative reforms approved earlier this year to be carried out, Malan said. Copyright 1998, Reuters News Service