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

To: Steve Fancy who wrote (11381)	1/11/1999 11:30:00 AM
From: Steve Fancy	Respond to of 22640

Brazil Govt Blocks Federal Subsidy To Minas Gerais State Dow Jones Newswires BRASILIA -- In a first direct reply to the Minas Gerais state debt moratorium declared last week, federally-owned Banco do Brasil has blocked the payment of a regular central government subsidy to the state, the Finance Ministry said Monday. A federal payment of 11.7 million reals (BRR) ($1=BRR1.20) from the States Participation Fund was due to be made to Minas Gerais Monday. A Finance Ministry spokeswoman said suspension of the payment was sanctioned Monday by federal Treasury Secretary Eduardo Guimaraes. The decision to block payment was made late Friday by Banco do Brasil and follows failure by Minas Gerais to pay a BRR26.8 million debt to the federal government that was due Sunday, Jan. 10. As reported, Minas Gerais Governor Itamar Franco last week announced a 90-day moratorium of his state's debt with the central government, causing local and international stocks to plunge as a result of renewed concern over Brazil. Under a BRR115 million debt rollover contract signed with the federal government in February 1998, Minas Gerais has to pay 12.5% of the state's income monthly to Banco do Brasil. When declaring the moratorium Franco claimed "a total lack of means" to pay the installments. The Finance Ministry said it carried out the the partial blocking of the federal FPE subsidy to Minas Gerais state by "an automatic trigger mechanism" activated as soon as states default on any federal debts they have. The FPE is a federal government fund that subsidizes regional states under defined clauses and conditions. Governor Franco's attitude was sharply criticized by politicians and fellow governors in Brazil's weekend press. In attempt to isolate Franco and put more pressure on him to review his decision on a moratorium, Governor Roseana Sarney of Maranhao state has called a nationwide governors' meeting for Tuesday in her state capital Sao Luis. By Monday at least nine state governors confirmed they will attend the meeting. Meanwhile state governor Olivio Dutra of Rio Grande do Sul, which some feared would take the same step as Minas Gerais, decided to try to negotiate a possible rollover of its BRR57 million debt to the central government, BRR38 million of which is due by Jan. 15. Although the federal government has repeatedly stated that further rollovers are out, Finance Ministry executive secretary Pedro Parente has agreed to meet with Rio Grande do Sul state finance secretary Arno Augustin, later Monday to find a solution to the stalemate. -By William vanvolsem; (5561) 244 3095; wvanvolsem@ap.org

To: Steve Fancy who wrote (11381)	1/11/1999 11:33:00 AM
From: Steve Fancy	Respond to of 22640

Key data... Governor Franco's attitude was sharply criticized by politicians and fellow governors in Brazil's weekend press. In attempt to isolate Franco and put more pressure on him to review his decision on a moratorium, Governor Roseana Sarney of Maranhao state has called a nationwide governors' meeting for Tuesday in her state capital Sao Luis. The comment he made about the Euro bonds and foreign markets was absolutely stupid on his part, and I'm glad to see it sounds like politicians in general may agree. sf