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

To: Steve Fancy who wrote (9322)	11/1/1998 3:03:00 PM
From: Steve Fancy	Respond to of 22640

G7 backs U.S. congressional reforms at IMF Reuters, Friday, October 30, 1998 at 21:46 By Adam Entous WASHINGTON, Oct 30 (Reuters) - The Group of Seven (G7) industrial nations agreed on Friday to U.S. congressional demands for policy changes at the International Monetary Fund, ensuring that the lending agency has the money to bail out economies caught up in the global crisis. "Working in close cooperation with other members of the executive board, we will support and act to implement the following reforms to improve the effectiveness of the IMF, including transparency and accountability of the institution and its lending policies," G7 executive directors at the IMF said in a joint statement. The G7 wields enormous power within the IMF's executive board, which makes day-to-day policy decisions for the fund. The board is chaired by IMF Managing Director Michel Camdessus. The Republican-led Congress agreed last week to hand over $18 billion to the IMF to replenish reserves depleted by multibillion-dollar rescue loans for Russia and three Asian states. President Bill Clinton signed the legislation into law on Oct. 21. In exchange for the money, Congress demanded that the Clinton administration work with other G7 nations to push through changes in the way the fund does business. The legislation calls for the IMF to charge crisis-hit countries more for emergency loans, to demand quicker repayment on some credits and to give the public and the Congress more information about its policy decisions. Before handing over the money, lawmakers had asked the Clinton administration to certify that their demands for reform would be met at the IMF. In a letter to Camdessus, executive directors for the United States, Canada, Germany, Italy, France, Britain and Japan agreed to push through the reforms set out by Congress. They said the IMF should release more information about its operations, except in cases where release might "compromise confidentiality." They said the IMF should also require borrowing countries to open their markets, comply with international trade agreements and treat creditors equally. "The terms on which the IMF extends financing can also help to reduce moral hazard, provide an incentive for early IMF repayment and encourage a return to private market financing," the letter said. As congressional Republicans had demanded, the seven executive directors said the IMF should charge higher interest rates -- at least three percentage points higher in some cases -- and demand shorter maturities of one to two-and-a-half years for more loans. Clinton administration officials said Friday's letter should meet the legislative requirements set out by Congress, and ensure that the IMF gets the $18 billion Washington has promised. U.S. payment is critical because it means the 182-member IMF will soon be able to tap into some $90 billion in new quota resources, which include money from the United States and other countries. The administration says the money is critically needed because the lending agency is trying to help nations caught in the global turmoil. The IMF is expected to announce a big rescue package for Brazil soon, and it could offer billions of dollars more to other Latin American states hit by the contagion. "I think, with the resources we have now, the IMF is...well-positioned in terms of resources to do what they need to do," U.S. Treasury Secretary Robert Rubin told reporters at the White House. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9322)	11/1/1998 3:05:00 PM
From: Steve Fancy	Respond to of 22640

FOCUS-G7 takes another shot at global turmoil Reuters, Friday, October 30, 1998 at 23:10 (Updates with Rubin comments, background, PVS London) By Knut Engelmann WASHINGTON, Oct 30 (Reuters) - Top industrial nations on Friday proposed another plan to douse the financial firestorm threatening growth and prosperity around the globe, eager to stop the flames from consuming yet another major economy. The latest measures by the Group of Seven countries aim to keep a tighter check on fickle flows of short-term capital and make the most of $90 billion in new money for the International Monetary Fund and its efforts to bail out crisis-hit nations. Brazil, the Latin American powerhouse hovering dangerously close to the economic abyss, was set to become the first beneficiary of a new warchest designed to give nations fast and easy access to funds needed for fighting off investor attacks. "We must do more to build a modern framework for the global markets of the 21st century and to limit the swings of boom and bust that destroy hope and diminish wealth," G7 leaders said in a statement that echoed a similar 10-page document drawn up by their finance ministers and central bankers. Britain took the lead in coordinating the measures because it currently chairs the G7, which also includes the United States, Japan, Germany, France, Italy and Canada. The plans, which emerged from a series of telephone calls between the G7 leaders, also addressed French and German concerns of excessive volatility in financial markets but skirted clear of any proposals to curb capital flows. G7 officials privately acknowledged the statement contained few new ideas beyond the relatively strong endorsement of a crisis-prevention fund, an idea floated by U.S. President Bill Clinton earlier this month to seize the initiative ahead of a meeting of G7 finance ministers and central bankers here. "The news is that we've finally come to a realization around the world that something needs to be done," said Greg Mastel of the Economic Strategy Institute, a think-tank in Washington. "But beyond that, there's really not that much." Immediately after the G7 statement's release, French President Jacques Chirac said there was a need for much greater coordination to ensure stability in currency exchange rates, particularly with the advent of Europe's single currency. His remarks reflected a growing uneasiness among some G7 members -- France and Germany in particular -- that global market instability has proven the case for tougher regulations of the free-wheeling international financial system. In Washington, Clinton hailed the plans as a "very, very important" part of global efforts to put a more human touch on the harsh realities of the global economy. His Treasury Secretary, Robert Rubin, said the statement was notable for drawing on the efforts of all G7 leaders and forecast it would set the agenda for debate for years to come. "What you see is a framework within which the international community is going to be working for a long time to come," he told reporters at the White House. Global financial markets liked what they heard with London stocks closing up 1.5 percent and the Dow Jones Industrial Average in New York rising 1.14 percent to 8,592.10 points. Markets in Brazil reacted enthusiatically to what traders said was a perception that IMF help for the battered economy was near, pushing its main stock index up 7.8 percent. Brazil has drawn up an $84 billion belt-tigthening plan which it hopes will convince the IMF to come up with some $30 billion in funds -- some of it provided directly by other governments -- that could help it fend off a painful crisis. Top Brazilian officials were on their way to Washington on Friday for last-ditch talks with the IMF to secure the loan. The new IMF mechanism, described by G7 bureaucrats as a "contingent financing facility," would offer countries that are deemed to be on the right path of reform a line of credit that could be drawn on when needed and repaid relatively quickly. "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," Deputy Treasury Secretary Lawrence Summers said. The more familiar parts of the G7 statements -- the last such communique was issued less than a month ago -- contained ideas such as improved regulation, greater transparency, and codes of best practice to prevent a rerun of the crisis that started last year in Asia and swiftly swept around the globe. The G7 stopped short of saying the crisis was over, even though stock markets have clawed back a good chunk of the steep losses they suffered over the summer. But leaders said they had been encouraged by a number of recent economic developments. Interest rates had been cut in the United States, Canada, Japan and several European countries. Japan had shown its intention to get over a deep recession, even though it still needed to take urgent action to stimulate demand and clean up its messy banking sector. "The key is for each of us to do our part," Rubin said. "But there's a lot of hard work ahead and I don't think any of us should lose sight of that." Copyright 1998, Reuters News Service