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

To: Steve Fancy who wrote (9749)	11/17/1998 5:27:00 PM
From: Steve Fancy	Respond to of 22640

BRAZIL CONGRESS WEEK-After IMF deal, eyes on Reuters, Monday, November 16, 1998 at 18:25 News magazine Veja published excerpts of a taped telephone conversation between Brazil's communications minister and the head of the National Development Bank in which the two officials allegedly discussed ways of influencing the outcome of July's $19 billion privatization of telephone company Telebras. Communications Minister Luiz Carlos Mendonca de Barros denied Monday he would resign over suggestions that he tried to favor a group taking part in the auction, and said the excerpts painted a one-sided picture of the government's privatization strategy. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9749)	11/17/1998 5:29:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil real not overvalued, IMF's Fischer says Reuters, Tuesday, November 17, 1998 at 11:41 NEW YORK, Nov 17 (Reuters) - Stanley Fischer, first deputy managing director of the International Monetary Fund (IMF), said on Tuesday he did not believe the Brazilian real was overvalued. "By historical standards, the Brazilian exchange rate is not by any stretch of the imagination overvalued by the levels indicated in newspapers," Fischer said. He was speaking by teleconference to an audience at a meeting organized by Brazil to explain the country's current agreement with the IMF to investors. The meeting was also addressed by Brazilian Finance Minister Pedro Malan. Fischer added the Brazilian real is not overvalued in terms of unit labor costs. "The exchange rate issue is greatly overplayed in the press and by my former academic colleagues," he said. "It is a critical point, that's why I bring it up." Fischer added he expected interest rates to decline in the near term. "We assume interest rates to come down slowly to below 20 percent by the end-of-year." He said projections are "not based on overly optimistic assumptions." On the fiscal reform package, he said, "I expect this government to deliver." Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9749)	11/17/1998 5:30:00 PM
From: Steve Fancy	Respond to of 22640

INTERVIEW-30 pct chance Brazil plans will fail-D&P Reuters, Tuesday, November 17, 1998 at 11:49 By Alejandra Labanca BUENOS AIRES, Nov 17 (Reuters) - There is at least a 30 percent chance that Brazil's financial and fiscal rescue packages will fail, the director of the Argentine office of credit-rating agency Duff & Phelps said on Tuesday. "The chances that the Brazilian program will fail, that there will be an exchange rate crisis or a debt crisis, are relatively high...There is at least a 30 percent probability that the Brazilian plan will end in disaster," Gabriel Rubinstein told Reuters in an interview. The International Monetary Fund (IMF) and a group of developed countries last week announced a financial aid package for Brazil worth more than $41 billion. The Brazilian government also presented a three-year $84 billion fiscal savings package at the end of October, including a mixture of tax hikes and spending cuts. The package was necessary to clinch the IMF aid but has still to be approved by Congress. The Paris-based Organization for Economic Co-operation and Development said on Tuesday that it expected Brazil's economy to contract by 1.5 percent in 1999 due to the austerity plans. Rubinstein said that a collapse of Brazil's economic plans could lead to "a large devaluation, capital controls, and compulsory debt restructuring, especially with regards to the internal debt." Latin America countries would receive lower capital inflows and growth would suffer if Brazil slid into disarray, he added. Neighboring Argentina would be most affected by trouble in its giant partner in the Mercosur customs union. "Lots of people would be asking if Argentina wouldn't be heading the same way. There would be fears that serious things could happen in Argentina," he said. Argentine economists have said the country's economic growth could be hit hard by a Brazilian downswing or devaluation, but they think its fixed exchange rate would stay in place. Argentina has pegged its peso at par with the dollar since 1991 under a currency board system requiring the Central Bank to back up money in circulation with foreign reserves. The biggest financial problem facing Brazil, Latin America's largest economy, is its domestic debt totaling about $300 billion, much of it short-term and paying interest of almost 50 percent. "Brazil's internal debt is so short-term and so expensive it could provoke an explosion at any moment," Rubinstein said. Rubinstein said the measures taken by the Brazilian government and the international community were insufficient. buenosaires.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9749)	11/17/1998 5:31:00 PM
From: Steve Fancy	Respond to of 22640

Brazil policies key to stability-Summers Reuters, Tuesday, November 17, 1998 at 12:15 WASHINGTON, Nov 17 (Reuters) - U.S. Deputy Treasury Secretary Lawrence Summers said on Tuesday it was critical that the Brazilian government press ahead with economic reforms to ensure stability takes hold. "Obviously the (IMF) support that's provided is very important, but what is most important for the prospects of maintaining stability and laying a foundation for resumption of growth in Brazil will be the actions that Brazil takes," Summers told reporters at the White House. Last week the International Monetary Fund and the world's richest nations pledged more than $41 billion in emergency loans to shore up Brazil's faltering economy. In exchange for the money, the Brazilian government has promised to carry out a three-year austerity program and other tough economic measures. Summers said these reforms, if carried out, should go a long way toward restoring confidence in Latin America's biggest economy. "That's why the discussions of fiscal policy in Brazil, between President (Fernando Henrique) Cardoso and the Brazilian legislature, will be so very important going forward, and certainly we will be watching those, as we expect investors will, very carefully going forward," Summers said. Summers added that he was encouraged U.S. banks had agreed to maintain their lines of credit with Brazil, and that reserve flows had improved. 898-8383, washington.economic.newsroom@reuters.com)) Copyright 1998, Reuters News Service