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

To: Steve Fancy who wrote (11415)	1/11/1999 6:01:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Rio Grande Do Sul Warns '99 Fdrl Debt "Unpayable" Dow Jones Newswires BRASILIA -- The Brazilian state of Rio Grande do Sul issued a statement in Brasilia late Monday saying its federal debt in 1999 of 800 million reals (BRR) ($1=BRR1.20) is "unpayable." The written statement was distributed to reporters shortly after the start of a scheduled meeting between Rio Grande do Sul state finance secretary Arno Augustin and federal Finance Ministry executive secretary Pedro Parente to discuss the state's debt payment difficulties. Rio Grande do Sul has hereby joined Minas Gerais state in officially declaring it's unable to meet its debt commitments with the federal government. Last week Minas Gerais governor Itamar Franco declared a 90-day moratorium on its federal debt payments, which sent local and global stock markets reeling. After the meeting, Augustin said that "the way things are, there is no way the state can meet its commitments." The Rio Grande do Sul finance secretary said he presented an overview of the state's financial situation during the meeting with Parente. Of the state's estimated BRR800 million federal debt in 1999, BRR57 million is due in January. The statement blames the previous state government for overspending. It says the previous governor, who left office Jan. 1, used the BRR5 billion earned from privatizations for new investments and to cover gaps in current accounts, "leaving the state (of Rio Grande do Sul) with uncovered liabilities of BRR1.233 billion at end 1998." -By William vanvolsem; (5561) 244 3095; wvanvolsem@ap.org

To: Steve Fancy who wrote (11415)	1/11/1999 6:03:00 PM
From: Steve Fancy	Respond to of 22640

Brazil/State's Moratorium -2: Franco's Position Weakens Dow Jones Newswires Later, Rio Grande do Sul - the fourth wealthiest state in terms of gross domestic product - said in a written statement that its BRR800 million debt with the federal government is "unpayable," and that if the situation doesn't change, the state won't be able to honor its commitments this year. Shockwaves from the Minas Gerais announcement last week and continued concerns that other states will follow suits sent Brazilian share prices reeling again Monday. The benchmark index of the Sao Paulo Stock Exchange, known as the Bovespa, spent the entire session Monday in negative territory and ended 5.6% lower at 6403. While analysts said they aren't expecting more states to declare a moratorium, market participants are looking for a continued strong response from the government. "Obviously, the market's focused on Cardoso and how he handles this situation, because it could get out of control," one Sao Paulo trader said, noting that foreign investors are particularly spooked by the episode. Late Monday, the leader of the government-allied coalition in the lower house of Congress, Arnaldo Madeira, said there's room for negotiation with states without restructuring the debt agreements, adding that it calls for "an understanding of the situation," the Estado news agency reported. A group of governors who are opposed to the Minas Gerais decision are slated to meet Tuesday in the northeastern state of Maranhao, which to some analysts signals the tide against Governor Franco is rising. "His position has definitely weakened since last week," said political scientist Fleischer, noting that the decision to stop debt payments may not have the desired political effect of coalescing an opposition front. "He acted without thinking and now it appears that he has no backup plan," Fleischer added. -By Stephen Wisnefski; (55-11) 813-1988; swisnefski@ap.org