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

To: Steve Fancy who wrote (9444)	11/5/1998 7:55:00 AM
From: Tony van Werkhooven	Read Replies (1) \| Respond to of 22640

Steve- Did we ever get a clear understanding what happens to all the TBR misc assets i.e. cash, stock in Port. Telecom, etc. See notes 15, 16, and 17 of the 1997 Annual Report. Should we anticipate some sort of final dividend? Tony

To: Steve Fancy who wrote (9444)	11/5/1998 10:51:00 AM
From: DMaA	Respond to of 22640

WSJ Editorial: 'Conditionality, Ha!' For some weeks now the international financial community has been waiting for a "fiscal reform" package from Brazil's newly re-elected President Fernando Henrique Cardoso. Getting the fiscal deficit under control has long been considered a necessary prerequisite for stabilizing the Brazilian real, which is pegged to the U.S. dollar, with a regular crawling depreciation. And this fiscal reform was also supposed to be necessary for Brazil to draw on International Monetary Fund assistance. The package has finally arrived, but provides little solace that Brazil can slay the behemoth federal budget deficit and lay the foundations for true currency stability. Mr. Cardoso's fiscal reform package--a proposal that must pass Congress--amounts to about 28 billion real (US$23 billion). About half of it is the traditional IMF prescription of tax increases. Of course as the economy heads into a recession, the revenues from the tax increases may never materialize, but never mind that. The other half is expenditure cuts, some of which may or may not materialize because Congress has to approve them. Even so, they make up only a fraction of what is needed and a sense of urgency remains lacking. What the proposal instead suggests is that the IMF has the world in such a mess it has lost the power to enforce "conditionality." Indeed, as long as the International Monetary Fund is perceived as having the wherewithal to make everything right and the alternative--no IMF assistance--cannot be considered for fear of "global collapse," overweight governments will delay reform. With the wildfire of currency devaluations that have spread around the globe and Brazil pegged as "too big to fail," the IMF has set itself up for extortion. The markets, as one banker told us back in early October, are expecting an IMF package. Brazilian currency stability is considered the firewall that protects the Americas from a meltdown that will wreck the region and the world. The supports for that firewall are now universally seen as the IMF credit lines. Indeed, Latin markets have stabilized, as multilateral support has seemed more certain. By the time Mr. Cardoso delivered his proposal, the IMF had already committed itself de facto, and conditionality was little more than ritual. With so much riding on the IMF credit lines, anything that Brazil handed in was certain to be rubber-stamped. By now the IMF is in a classic dilemma. Without the highly anticipated credit lines, another run on the Brazilian real and another round of financial upheaval is nearly certain. But it is worth noting, whether we like it or not, that the notion of conditionality and discipline coming from the IMF is now officially dead. Brazil either gets the money or we all suffer the consequences. Brazil does not have nuclear weapons but we have an image these days of Brazilian Finance Minister Pedro Malan sitting in Brazil with his finger on the "red" button, threatening to blow us all to kingdom come unless the IMF hands over the money. Of course, Brazilians would suffer first and most from a devaluation, the ensuing inflation and likely recession. But instead of facing the truly tough political fights with Congress and Brazilian state authorities, President Cardoso and Minister Malan believe they can win in a game of chicken with the IMF, getting the loans to defend the real without accepting the discipline of a stable currency. It is of course another species of the moral hazard that has been mounting in the international markets starting with the Mexican devaluation and bailout. In the surreal world that the roving IMF has brought us, instead of the Fund threatening to withhold credit from Brazil until it gets ' its fiscal house in order, Brazil now threatens the IMF and the markets.

To: Steve Fancy who wrote (9444)	11/5/1998 11:57:00 AM
From: lebo	Respond to of 22640

market down ~50 TBH @ 84. Good speech from Greenspan and this baby could hit 90.

To: Steve Fancy who wrote (9444)	11/5/1998 12:12:00 PM
From: Steve Fancy	Respond to of 22640

IMF Fischer -2: Doesn't Say How Much Package Will Be Worth Dow Jones Newswires TOKYO -- The International Monetary Fund will announce details of an economic assistance package for Brazil this month, the IMF deputy managing director said Thursday. Asked by reporters before a meeting with Japanese Finance Minister Kiichi Miyazawa when the package will be announced, Stanley Fischer said, "This month for sure." He declined to elaborate on when exactly the announcement will be made and also declined to say how much money will be included in the package. The international aid package for Brazil is widely expected to total about $30 billion, and will likely include contributions from multilateral agencies, the Group of Seven industrialized nations and possibly private banks. Fischer is in Tokyo for a two-day visit. Fischer told reporters after his meeting with Miyazawa that the two discussed the Japanese economy and developments in the Asian financial sector. He said that the Japanese government's moves to clean up the financial sector, including the nationalization of the Long-Term Credit Bank of Japan and the passage in parliament of banking reform bills, are "very encouraging." Fischer said he hopes Japan continues to restructure its banking sector, and also urged the government to continue to implement fiscal stimulus steps. "It's well-known that the IMF supports Japan's efforts to accelerate the restructuring of the banking system and the continuation of fiscal expansion," Fischer said. He also praised Miyazawa's plan to spend up to $30 billion to boost the economies of Asian countries, saying it was a "very constructive development." Brazil wasn't discussed at all during the meeting, Fischer said. A Japanese Finance Ministry official who attended the meeting said the two specifically discussed the financial situations in Indonesia, Thailand, the Philippines and Malaysia. Fischer told Miyazawa that the recent recovery of the Indonesian rupiah was a good thing, and that a stable rupiah would help Indonesia resolve its corporate debt problems, the official said. The official said Fischer would meet Bank of Japan Governor Masaru Hayami Friday.

To: Steve Fancy who wrote (9444)	11/5/1998 12:15:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Govt: Early Telebras Payments No Longer Needed-Estado Dow Jones Newswires SAO PAULO -- The Brazilian government won't negotiate further early payments from companies that acquired federal telecommunications assets earlier this year, the Estado news agency reported Thursday. Communications Minister Luis Carlos Mendonca de Barros said that the government won't seek early payments from Telecom Italia SpA and MCI Communications Corp (MCIC), noting that there is no longer a need. He added, however, that companies that wish to make early settlements may do so. Last month, Spain's Telefonica SA (TEF) and Portugal Telecom (PT) purchased around $3.9 billion in bonds issued by the National Development Bank, or BNDES, to finalize their acquisitions of local telecommunications assets. Mendonca de Barros said that he had negotiated the deal with the Iberian companies as way to protect the country's international reserves amid mounting financial market turmoil. Brazil's reserves fell to $45 billion at the end of September, from $70 billion at end-July. The government sold 12 units of federal telecommunications giant Telecomunicacoes Brasileiras SA, known as Telebras (TBR), at a privatization auction July 29. The auction earned the government 22 billion reals (BRR)($1=BRR1.19).

To: Steve Fancy who wrote (9444)	11/5/1998 12:16:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Reform Approval Big 1st Step In Fiscal Overhaul By STEPHEN WISNEFSKI Dow Jones Newswires SAO PAULO -- The Brazilian government proved its muscle Wednesday when Congress gave final approval to a landmark reform bill, but analysts warned that it was only the first step on a long path to fiscal responsibility. The lower house of Congress late Wednesday approved the final three points of a social security bill that had been delayed in Congress for over three years. The measure aims to save the government 4 billion reals (BRR)($1=BRR1.19) in 1999 and around BRR18 billion over the next three years. "Euphoria is being avoided because, although it is an important first step, much still needs to be done," said Peter West, head economist at BBV Latinvest in London. "Excitement about what happened yesterday will quickly fade if the process doesn't advance." The process West refers to is the approval of the wide-ranging fiscal plan unveiled by the government last week. The plan includes a number of unpopular tax hikes that will require approval from a notoriously unreliable Congress. "One victory doesn't necessarily guarantee a second one," said Brasilia-based political analyst Carlos Lopes of the Santa Fe institute, adding that the government will have to continue working hard to secure legislative support. Lopes noted that the two issues - social security reform and the fiscal plan - are quite distinct from each other and legislators who voted in favor of the government Wednesday might not be as eager to support some of the controversial measures included in the plan. Analysts had said in recent days that the government would have a better idea of how difficult it will be to push through the fiscal plan after the social security vote. But in spite of an overwhelming victory, some members of Congress said that it's not clear cut. "It's too early to say that yesterday's voting shows that it will be easy for the government to approve the fiscal measures," said Arnaldo Madeira, the leader of the pro-government coalition in the lower house. Analysts were quick to point out, however, that the large turnout for voting Wednesday is a good sign that Congress is taking the call for austerity seriously. When voting got underway, 486 of the 513 lower house members were present, erasing concerns that opposition party members would boycott the session to delay voting. "The fact that 480 deputies voted on the last outstanding point of the bill, and this at a quarter-to-midnight, is a very positive result for the government," said Santa Fe's Lopes. "It's an indication Congress will play the game for the rest of the year and that's good news for the fiscal measures." But congressional willingness to do the right thing is far from the only motivating factor, analysts said, attributing the strong show of support Wednesday to intense mobilization efforts by the government to guarantee victory. "What we're hearing is that the horse-trading is getting very serious," said Walter Stoeppelwerth, head of research at Flemings in Sao Paulo. "The government is mobilizing like never before." The benchmark index of the Sao Paulo Stock Exchange, or Bovespa, had soared 17% in the three trading sessions leading up to the vote, largely on optimism that the reform bill would pass. Just past midsession Thursday, local shares were bucking a downtrend on key global markets and had moved ahead nearly 2%. Analysts said, however, that the success of the reform vote won't sustain market optimism for long. "We're trying to attenuate expectations," Flemings's Stoeppelwerth said. "Yesterday was an incredibly important first step, but people are looking to see something tangible every month," he added. The next major piece of news likely to buoy investor sentiment is an aid package from international lenders. Recent reports have indicated that Brazil could sign a letter of intent with the International Monetary Fund this week, with an aid deal - widely expected to total over $30 billion - approved before the end of November. Analysts said that the first big hurdle in the fiscal plan will be the the proposal to raise the CPMF financial transactions tax. The plan calls for a near doubling of the tax - charged on all banking operations - to 0.38%. Authorization for the CPMF runs out in January, which means that the government will have to keep the pressure on Congress just to ensure that the revenue stream continues, even at its current level. The measure must go through two votes in each house. -By Stephen Wisnefski; (55-11) 813-1988; swisnefski@ap.org (William Vanvolsem in Brasilia contributed to this article)

To: Steve Fancy who wrote (9444)	11/5/1998 12:19:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Franco To Travel Thu To U.S. For Talks With IMF Dow Jones Newswires BRASILIA -- Brazil's Central Bank president Gustavo Franco will travel to Washington D.C. Thursday evening for talks with the International Monetary Fund, a spokeswoman at the monetary authority said. Franco will then travel to Basel on Saturday for meetings with the Bank for International Settlements (BIS). The spokeswoman also said that economic policy director Altamir Lopes, who's been in Washington since last Saturday as part of a delegation meeting with the IMF, is due to return to Brazil by Saturday. More details on Franco's travel plans are expected to be released later Thursday.