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

To: Steve Fancy who wrote (9302)	10/30/1998 1:19:00 PM
From: Steve Fancy	Respond to of 22640

Brazil to give IMF letter of intent - report Reuters, Friday, October 30, 1998 at 05:39 RIO DE JANEIRO, Oct 30 (Reuters) - Senior Brazilian officials will travel to Washington on Friday to deliver a letter of intent on behalf of the government to the International Monetary Fund for a $30 billion credit line for the troubled economy, the daily O Globo said. The officials, Altamir Lopes from the Central Bank's economic department and Amaury Bier, political economy secretary in the Finance Ministry, would submit a government proposal to IMF technical officials for their examination, the newspaper said. Brazil's Finance Minister Pedro Malan presented an $84 billion fiscal austerity package for the next three years to Congress on Thursday, in a bid to reduce the country's bloated budget deficit and ward off the threat of a punishing currency devaluation. Malan urged Congress to vote quickly on the measure, which includes spending cuts and tax increases, saying: "The current situation is fiscally unsustainable. Either Brazil corrects the imbalance in its fiscal accounts ... or we will be permanently thrown to the fate of the economic climate." The fiscal plan is considered an essential stage for Brazil to qualify for the IMF-led loan. Investors worldwide fear the specter of Brazil's becoming the latest emerging market victim of the financial turmoil that has devastated economies in Russia and some Asian nations. In an interview with Reuters on Thursday, the Central Bank's Director of International Affairs Demosthenes Madureira de Pinho Neto said he expected Brazil would finalize the agreement with the IMF quickly, probably in November. But O Globo said a few details of the proposal to be delivered to the IMF still needed to be ironed out, such as an amendment that extends the existing Fiscal Stabilization Fund (FEF) to 2006. The FEF allows Brazil's federal government to retain tax receipts normally earmarked under the constitution for states and municipalities. To change it would require a constitutional amendment that must pass through panels in both houses of Congress and be approved by a three-fifths majority in two votes in each house. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9302)	10/30/1998 1:21:00 PM
From: Steve Fancy	Respond to of 22640

razil to discuss letter of intent with IMF Reuters, Friday, October 30, 1998 at 10:15 BRASILIA, Oct 30 (Reuters) - Brazilian officials will discuss with the International Monetary Fund over the next few days the terms of a letter of intent for a multibillion-dollar credit line, a spokeswoman for the Central Bank said Friday. "They will start to discuss the terms of the letter of intent," the spokeswoman told Reuters. Finance Ministry Executive Secretary Amaury Bier and Altamir Lopes, head of the Central Bank's economics department, were to travel to Washington Friday for talks with the IMF on an expected $30 billion financial aid package. The trip comes two days after Brazil announced a tough fiscal austerity plan to save $84 billion over the next three years in a bid to prevent the kind of currency collapse that has crippled Asian countries and Russia. The Central Bank spokeswoman's comments contradicted newspaper reports Friday that Bier and Lopes would be taking a prepared letter of intent to the United States. raquel.stenzel@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9302)	10/30/1998 1:22:00 PM
From: Steve Fancy	Respond to of 22640

Brazil dollar outflows should slow further in Nov. Reuters, Friday, October 30, 1998 at 10:15 SAO PAULO, Oct 30 (Reuters) - Brazil should lose considerably less money through its foreign exchange markets in November and could even see a net inflow of the U.S. currency, traders said on Friday. With a fraction of corporate bonds and loans coming due and more foreign direct investment, Brazil has seen the end of the huge capital flight that came close to forcing a currency collapse, traders said. "The foreign exchange market is going to be so calm that we could see foreign investors coming back to trade," one forex dealer said. The market was bolstered by a government announcement earlier this week of a tough fiscal plan aimed at fending off a financial crisis and paving the way for an international line of credit. More than $30 billion flew out of Brazil in August and September, draining reserves and pressuring the government to devalue the real. A sharp hike in interest rates slowed dollar flight but on average about $500 million a day still left for most of October, as companies took money out of the country to pay off almost $2 billion in corporate bonds and more than $1 billion on farm loans. It would have been another month of big dollar outflows if foreign companies hadn't laid down the cash for recent telephone and bank purchases. As of Thursday, Brazil had lost $1.66 billion. In November, however, less than $200 million in corporate debt is coming due and some traders are optimistic that companies might even go back to the debt market, which would result in dollars coming into Brazil. "In terms of crises, we don't have any more big problems in Russia or Asia and the outlook here and in Latin America is looking up," a forex trader at Banco Real in Sao Paulo said. He said he sees about $700 million leaving Brazil next month -- less than half the daily average outflows in the first half of September. Other traders said they expect a slightly positive figure by the end of November, with ABN Amro Bank bringing in more money to pay for its purchase of Banco Real earlier this year and new debt issues. shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9302)	10/30/1998 1:23:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shares surge 7.1 pct on IMF loan hopes Reuters, Friday, October 30, 1998 at 12:27 SAO PAULO, Oct 30 (Reuters) - Brazilian share prices surged in afternoon trade Friday on snowballing optimism that the International Monetary Fund loan package for Brazil will not be delayed, traders said. At 1500 local/1700 GMT, the Sao Paulo Stock Exchange Bovespa Index was up 7.1 percent at 7003, slightly off its high of 7015. Volume was below average at 240 million reais. Benchmark Telebras receipts <RCTB.40.SA> were outperforming the index slightly, with a gain of 7.5 percent to 90.90 reais. "People are thinking that the IMF will grant the loan even before the fiscal measures pass through Congress," said one trader. The government presented on Wednesday a three-year fiscal austerity plan, considered to be a prerequisite to the IMF-led financial aid package, estimated at between $30 billion and $45 billion. Congressional approval of some of the plan's key points may take a few weeks to materialize. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9302)	10/30/1998 1:25:00 PM
From: Steve Fancy	Respond to of 22640

Brazil still has issues to address, Rubin says Reuters, Friday, October 30, 1998 at 13:07 WASHINGTON, Oct 30 (Reuters) - U.S. Treasury Secretary Robert Rubin said on Friday that Brazil had done a good job on pursuing reforms to restore confidence in its economy but still had a series of issues to address. Rubin also told a news conference it was crucial for Brazil to implement its recently announced fiscal reform quickly. "Brazil is a situation in which there has been a strong reform program (but) there obviously are issues that still need to be dealt with," Rubin said. Brazil has announced a $84 billion austerity plan to get its ailing economy back on track and qualify for a multi-billion dollar international aid package expected to be put together by the International Monetary Fund. Rubin said Brazil needed to move swiftly to implement its plan. "Obviously it's very important that they do this effectively and do it with reasonable dispatch," he said. Brazilian Finance Ministry Executive Secretary Amaury Bier and Altamir Lopes, head of the Central Bank's economics department, were to travel to Washington on Friday for talks with the IMF on the expected $30 billion financial aid package. Brazil hopes the funds will help to prevent the kind of currency collapse that has crippled much of Asia and Russia. 898-8383, washington.economic.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9302)	10/30/1998 1:26:00 PM
From: Steve Fancy	Respond to of 22640

G7 ideas could apply to Brazil, Summers says Reuters, Friday, October 30, 1998 at 13:11 WASHINGTON, Oct 30 (Reuters) - Deputy U.S. Treasury Secretary Lawrence Summers said some of the ideas proposed by the Group of Seven major industrial nations on a precautionary finance instrument could apply to Brazil. Speaking at a news conference after a G7 statement issued in London, Summers also said the G7 proposals did not involve any U.S. commitment for further funding for the International Monetary Fund. "Some of the ideas involved with contingency financing could possibly find application in Brazil, although that will of course depend on how the situation in Brazil progresses," Summers said. "The key idea is that there's the prospect of finding finance in the form of a credit line that is contingent so as to provide a reinforcement to confidence and the kind of backstop that could support the normal flow of private capital," he added. Asked if the new facility outlined in the G7 statement involved any additional U.S. contribution to the IMF, Summers replied: "There is no commitment of finance to the IMF beyond what is contained in the quota." washington.economic.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9302)	10/30/1998 1:28:00 PM
From: Steve Fancy	Respond to of 22640

G7 statement helps boost emerging markets debt Reuters, Friday, October 30, 1998 at 13:19 By Hugh Bronstein NEW YORK, Oct 30 (Reuters) - Emerging market debt prices got a boost on Friday from a statement by the Group of Seven (G7) leading industrialized nations that indicated coordinated support for emerging economies, U.S. traders and analysts said. By midday Friday, emerging debt spreads to comparable U.S. Treasury securities had tightened by 78 basis points to 1161, according to JP Morgan's Emerging Markets Bond Index. "This is a corrective rally that could go up a bit more before it peters out," said Martin Schubert, chairman of the European Inter-American Finance Corp., an emerging markets debt trading and fund managing firm. Emerging debt prices were depressed earlier in the week as Brazil's proposed fiscal austerity plan met with skepticism. The G7 on Friday proposed a range of measures aimed at strengthening the global financial system and heading off future economic crises. British Finance Minister Gordon Brown summarized the G7 statement at a London news conference early in the U.S. trading session. Brown said the group agreed that slow growth, not inflation, was now the main risk facing the world economy. "The G7 statement is very important because for some time markets have wanted to see coordinated action and leadership from the G7," said Javier Murcio, director of Latin American economics at Credit Suisse First Boston, "It sets the stage for quicker and more coordinated action from the G7 and the IMF to help emerging markets," said Pablo Goldberg, a vice president in fixed income research at ABN-AMRO. Britain coordinated the statement with the other G7 members, the United States, Japan, Germany, France, Italy and Canada. Brown said the G7 had agreed to provide additional resources of $90 billion for the IMF by increasing its quotas, or membership subscriptions. The money would go toward paying for a new financial safety net at the fund to help economies that run into economic trouble. "The statement shows that the U.S. and Europe will do everything in their power to avoid a further emerging market meltdown and it shows the beginning of a revision to the IMF system," Schubert said. "The new system will be designed to help countries that may not be in fundamentally poor economic condition but may require temporary currency support to avoid speculative attacks," he added. Along with the G7 statement, prospects for lower interest rates in the United States, Europe and Brazil, coupled with press reports of a larger-than-expected International Monetary Fund (IMF) loan package to Brazil, contributed to the overall bullishness, analysts said. A story in a leading Brazilian newspaper said the IMF-led international support plan may total $45 billion, up from the $30 billion package investors had expected, they said. Near midday, benchmark Brazil C bonds <BRAZILC=RR> were up one point to bid 61-7/8, the country's DCB debt <BRADCB=RR> was up 3-1/2 to bid 52-1/2, Argentine PAR bonds <ARGPAR=RR> were up 5/8 to bid 69-1/4 and Mexican PAR debt <MEXPAR=RR> was up 1/2 to bid 74-5/8. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9302)	10/30/1998 1:31:00 PM
From: Steve Fancy	Respond to of 22640

G-7 Likely To Endorse New IMF Funding Route: Washington Post Dow Jones Newswires WASHINGTON -- The Group of Seven leading industrialized nations are likely to endorse U.S. President Bill Clinton's proposal to create a new form of assistance to countries menaced by financial turmoil, the Washington Post reported Friday, citing G-7 officials. If the G-7 issues a statement under consideration, perhaps as early as Friday, it would pave the way for Brazil to become the first country to receive a new form of International Monetary Fund financing, the paper said. The newspaper added, however, that officials involved in drafting the statement cautioned that agreement had not been finalized on several important points. The proposed statement also includes references to a number of ideas for revamping the international financial system and the governance of the IMF that were discussed at the fund's annual meeting earlier this month. Clinton has spent considerable time on the phone this week discussing the statement with his fellow G-7 leaders, U.S. officials told the newspaper. The president spoke Thursday with German Chancellor Gerhard Schroeder, and earlier in the week with British Prime Minister Tony Blair, Canadian Prime Minister Jean Chretien and Italian Prime Minister Massimo D'Alema. A centerpiece of the proposed statement is a G-7 endorsement of Clinton's proposal, advanced shortly before the IMF meeting, to establish a new "mechanism" for dispensing IMF aid to provide countries with large lines of credit they can tap at will. The new mechanism would have some advantages over previous IMF rescues that flopped, notably Russia's -- but also some drawbacks. In a traditional IMF rescue of a financially strapped country, the fund provides a certain amount of loans upfront, followed by additional loans contingent on the country adopting belt-tightening policies and other measures that are supposed to put the economy on a stable track. But under the new mechanism, a country such as Brazil that has embraced IMF-approved economic policies would get access to a large line of credit that it could draw on whenever a financial emergency arises. The G-7 previously had agreed only to "explore" the idea, in part because of worries about whether it made sense, and in part because at the time Clinton first advanced it, Congress had not yet approved Washington's contribution to a $90 billion international replenishment of the fund's resources. The statement under discussion doesn't mention Brazil as the first country likely to benefit from the new mechanism. But Deputy Treasury Secretary Lawrence H. Summers told The Washington Post on Wednesday that Brazil's IMF aid package -- which officials have said will total about $30 billion -- will probably be the first case.

To: Steve Fancy who wrote (9302)	10/30/1998 1:32:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Officials/IMF -2: Follows Fiscal Plan's Release Dow Jones Newswires BRASILIA -- A delegation of Brazilian officials will travel to Washington for weekend meetings with the International Monetary Fund, a Finance Ministry spokeswoman said Friday. Brazil's team will be led by Finance Ministry Economic Policy Director Amaury Bier, leading negotiator with the IMF over the past few months. Bier's counterpart at the Central Bank, Altamir Lopes, will also participate in the talks. The spokeswoman said the Brazilian officials will travel either Friday night or early Saturday. She couldn't comment on the content of the meetings. Earlier this week, Brazil unveiled a fiscal austerity plan aimed at saving 28 billion reals (BRR) ($1=BRR1.19) next year. A tough, realistic plan was considered a pre-requisite for Brazil to receive funding from the IMF and other multi-lateral lenders. The Finance Ministry spokeswoman said the two officials will return to Brazil Wednesday. Two weeks ago, a team led by Finance Ministry Executive Secretary Pedro Parente spent four days in Washington meeting with IMF officials. Friday, Oct. 23, IMF Deputy Managing Director Stanley Fischer was in Rio de Janeiro to meet with Finance Minister Pedro Malan and Central Bank President Gustavo Franco. Local daily O Estado de Sao Paulo Friday quoted a senior IMF official as saying that the Fund will issue a letter of intent next week with the terms of a financial aid package for Brazil. The O Estado report said the IMF won't wait for Brazil's Congress to approve some of the controversial measures in the fiscal plan before finalizing the aid package. About BRR13 billion of the savings projected for 1999 would be the result of tax increases, which will require approval from an often-unreliable Congress. International lenders are widely expected to extend a credit line of about $30 billion to Brazil to curb a financial crisis that has reduced the country's reserves to $45 billion from $70 billion at the end of July. -By William Vanvolsem and Stephen Wisnefski;(5511) 813-1988

To: Steve Fancy who wrote (9302)	10/30/1998 1:37:00 PM
From: Steve Fancy	Respond to of 22640

Japan MOF: New IMF Funding Facility Has Brazil In Mind Dow Jones Newswires TOKYO -- A plan by the group of seven nations to provide a short-term line of credit to countries in the process of reforming their economies under the guidance of the International Monetary Fund was conceived with Brazil in mind, a senior Japan Ministry of Finance official said Friday. Asked at a late night press briefing if a reference in Friday's G-7 statement to creating a short-term line of credit as part of arrangements for dealing with contagion was meant to address recent developments in Brazil, the official said, "It's a difficult subject to discuss but...yes, there's no mistaking that." Earlier Friday, the G-7 released a statement saying the nation's had agreed among other things to create an "enhanced IMF facility which would provide a contingent short-term line of credit for countries pursuing strong IMF approved policies." The official, who was speaking off the record, also said the timing of Friday's G-7 statement partly was due to the situation in Brazil. He added that the idea for unveiling a formal G-7 declaration regarding weaknesses in emerging markets and international financial problems originated in the U.K. The official noted that the declaration's reference to examining the appropriate transparency and disclosure standards for private sector institutions such as investment banks and hedge funds marked the first time that the G-7 had agreed on such an issue. Asked if there was heated debate regarding that issue, the official said, "There was a lot of debate on all of these issues. Well...you can imagine what sorts of arguments were made, I think." Japan has been urging greater transparency standards for hedge funds in the last few months, accusing the U.S., at times, of not keeping sufficient watch over such institutions.

To: Steve Fancy who wrote (9302)	10/30/1998 1:39:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Delays Deficit, Money Supply Data Due To IMF Mtgs Dow Jones Newswires BRASILIA -- The release of Brazil's public accounts for August and money supply figures for September, scheduled for next Wednesday, have been postponed to an undetermined date, the Central Bank said Friday. A spokeswoman at the bank said the postponement is due to the visit by economic policy director Altamir Lopes to the IMF in Washington. As reported, Lopes is leaving for the U.S. Friday night or Saturday morning with his counterpart at the Finance Ministry, Amaury Bier, for talks with the IMF on Brazil's fiscal stability plan. The plan was unveiled by the government on Wednesday. "As Lopes is only scheduled to return next Wednesday, the release and consequent briefing by Lopes on public accounts has been canceled. No new date has yet been set," the spokeswoman said. Last month Lopes announced that in July Brazil registered a nominal public deficit of 4.25 billion reals (BRR) ($1=BRR1.18), down from BRR8.67 billion in the previous month. For the first seven months of the year the nominal public sector deficit narrowed to 7.0% of gross domestic product (GDP). -By William Vanvolsem; 5561-244-3095; wvanvolsem@ap.org

To: Steve Fancy who wrote (9302)	10/30/1998 1:41:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

World Bk Pres Sees Brazil Bailout "In Next Few Days" Dow Jones Newswires UNITED NATIONS -- The International Monetary Fund will announce what is expected to be a $30 billion aid package for Brazil in the coming days, World Bank President James Wolfensohn said Friday. A delegation of Brazilian officials is expected to arrive in Washington this weekend for talks with the I.M.F. on the package. Brazil's team will be led by Finance Ministry Economic Policy Director Amaury Bier, leading negotiator with the IMF over the past few months. Wolfensohn, in New York for a meeting of the heads of U.N. agencies, declined to comment on details of the I.M.F. plan. The standby loan is expected to combine at least $30 billion from the fund and other lending agenies, including the World Bank, as well as direct contribution from the U.S. and other industrial nations. "It'll all be announced in the next few days," Wolfensohn said, referring to the aid package. Earlier this week, Brazil announed a fiscal austerity plan aimed at saving 28 billion reals (BRR) ($1=BRR1.19) next year. The controversial measure, which relies heavily on tax increases and pension payments from workers, now goes to the Brazilian Congress. A tough plan was considered a prerequisite for Brazil to receive I.M.F. funding. Wolfensohn said the proposal appears to meet I.M.F. standards. "I think it shows that the governments taking very strong measures in terms of fiscal, monetary goals," Wolfensohn said. "Now it's up to the Congress to approve it. Hopefully that'll take place and when it does, I think they've got a very foward looking program." -By Jim Efstathiou; 201-938-2062; jim.efstathiou@cor.dowjones.com