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

To: Steve Fancy who wrote (11881)	1/16/1999 11:00:00 PM
From: wl9839	Read Replies (2) \| Respond to of 22640

Looks like our friend Itamar and his cronies are at it again. Brazilian States Ask Federal Govt ToRenegotiate Debt Dow Jones Newswires RIO DE JANEIRO (AP)--Amid turmoil over Brazil's abrupt devaluation of its currency, opposition governors plan to unite to force the government to renegotiate their multi-billion dollar debts. Six governors are to meet Monday in Minas Gerais state, whose Gov.Itamar Franco triggered the latest market upheaval by suspending payments on his state's 15 billion reais (BRR) ($1=BRR1.43) debt for 90 days. The moratorium added to fears that the federal government doesn't have the political support to pass severe budget-cutting reforms, a condition for release of a $41.5 billion aid package from international lenders. The market turmoil led the government to devalue the real by about 8% last week. Two days later, it removed all restrictions on dollar trading and promised to set new rules Monday. The finance ministers of the six states met Friday and said local governments could not maintain essential public services and also pay their debts. Brazil's 26 states and the Federal District of Brasilia now owe the federal government some $78 billion, or 100.6 billion reals. The debts have risen steadily due to high payrolls and interest rates, inefficient state companies, pork-barrel projects and corruption. The ministers suggested limiting debt payments to 5% of state revenue, compared to 12%-15% today. So far, the government has refused to negotiate. On Friday, President Fernando Henrique Cardoso indirectly criticized Franco, a former Brazilian president. "Declarations and irresponsible actions over a moratorium on state debt caused many Brazilians as well as foreigners to take their assets out of Brazil," Cardoso said in a nationally televised speech. Other governors say they don't intend to default on loans but simply can't afford to pay. Rio de Janeiro state finance minister Carlos Sasse said it's impossible to meet payments on its $15.3 billion debt. In Rio Grande de Sul, the state Supreme Court agreed to let Gov. Olivio Dutra deposit debt payments in escrow. The federal government asked the nation's highest court to overturn the ruling. Many analysts think Cardoso has little choice but to hammer out an agreement with governors. "The president will have to renegotiate," said Claudio Goncalves Couto, a political science professor at Sao Paulo's Catholic University. "Besides, the series of events unleashed by Itamar Franco has given the states more maneuvering room." Franco, in his first public appearance since declaring the moratorium, attacked Cardoso on Friday for "handing over our industries to foreigners" and implementing policies that "bring unhappiness, recession and unemployment."

To: Steve Fancy who wrote (11881)	1/18/1999 11:33:00 AM
From: Steve Fancy	Respond to of 22640

Brazil Parana Governor: Brasilia Owes States Pension Money By ADRIANA ARAI Dow Jones Newswires CURITIBA, Brazil -- In the ongoing battle between Brazilian states and the federal government over debt obligations, a gubernatorial ally of President Fernando Henrique Cardoso said Brasilia owes the states money linked to pension funds. The governor of the southern state of Parana, Jaime Lerner of the Cardoso-allied Liberal Front Party (PFL), said late Sunday the federal government owes the states a few billion reals (BRR)($1=BRR1.43) that should have been transferred to the state-administered pension systems several years ago. "Why do we have a debt to honor, and the debt they (the federal government) owe us can't be honored?," said Lerner, speaking to a group of reporters at a dinner ahead of Monday's presidential dedication of a Volkswagon plant in his state. The governor referred in particular to some BRR1.2 billion he said the federal government owes Parana - Brazil's fifth-wealthiest state in terms of gross domestic product - under changes to the pension system. Under the 1988 constitution, states and local governments were allowed to create their own pension systems, separate from that of the federal government. Until then, however, state workers were paying into the federal system and the constitution says states must be reimbursed. A bill forcing the federal government to pay those debts has been in Congress for four years. Lerner cited the problem after having criticized the decision by Itamar Franco, the governor of Brazil's third-wealthiest state of Minas Gerais, who 12 days ago declared a 90-day moratorium on federal debt payments. "If we signed the contracts, they must be honored," he said, referring to BRR108 billion in state debts owed to the federal government under a payment restructuring accord signed earlier this decade. Parana owes the federal government BRR889 million under that accord. Between 1994 and mid-1998, the federal government renegotiated debts with 24 of Brazil's 27 states, assuming BRR83 billion in obligations in return for repayment at highly subsidized rates over 30 years. As of early January, the federal government said those debts had risen to BRR108 billion. "We should find alternatives to the moratorium, recognizing that some states will need federal help once more," Lerner said. A group of six recalcitrant governors, hosted by Minas Gerais' Franco, are scheduled to meet Monday in that state's capital to discuss solutions to state financing problems. Lerner, as public finance experts have also done, said Sunday that the remedy for the states' problems is the creation of viable pension funds. Currently in most states, civil servants pay only 6% of their salaries on average into pension systems, but receive disproportionately high retirement payments. Lerner said he created a capitalization fund last year which calls for workers to pay between 12-16%. He said Parana currently spends 72% of its revenue on personnel, of which 34% is to pay retirees, up from 20% when he took office in 1995. Monday, during a breakfast meeting with journalists, Lerner proposed that the federal government help states that have established self-sustaining pension funds by injecting money into the funds, to speed up capitalization. "The federal government could issue securities guaranteed by the credits states already have against federal coffers," Lerner said. He said he will take this proposal to the federal government in the coming days, adding that this is the only way states can balance their accounts. Lerner noted that Parana is the only state that filed a suit against the federal government to try to recover the money owed to the state. The suit was filed in 1996, but no court ruling has been handed down yet. Aside from the BRR889 million due as part of the debt rollover, Parana owes the federal government BRR4 billion as a result of a federal program to rescue state bank Banestado. Lerner noted that all states are owed money by the federal government, but that the total amount due the states has never been calculated. Parana's budget for 1999 is BRR9.3 billion, of which 13% is earmarked for monthly federal debt payments. As reported, the finance secretaries from six states are scheduled to meet with Minas Gerais government officials Monday to discuss debt payments to the federal government. The group of seven states are expected to propose that debt payment requirements be limited to 5% of state revenue, as opposed to the 12-15% currently being handed over. Lerner said Monday that state governors shouldn't try to lower the rate, but instead should attempt to reduce outlays on personnel. -By Adriana Arai; (55-11) 813-1988; aarai@ap.org

To: Steve Fancy who wrote (11881)	1/18/1999 11:37:00 AM
From: Steve Fancy	Respond to of 22640

Brazil Cardoso: Rate Cuts Hinge On Fiscal Reform Approval Dow Jones Newswires SAO JOSE DOS PINHAIS, Brazil -- Brazilian President Fernando Henrique Cardoso once again said that fiscal reform measures must be approved before interest rates will be cut. "The moment requires that we be aware of our responsibilities and be austere in balancing our accounts," Cardoso said Monday, speaking at the inauguration of a Volkswagen/Audi plant here. The president is scheduled to meet with Senate President Antonio Carlos Magalhaes and lower house leader Michel Temer at 1700 GMT in Brasilia to discuss the strategy to vote on the fiscal plan that formed the backbone of an agreement with international lenders for $41.5 billion in aid. Cardoso's remarks came hours after the government announced it would allow the local currency, the real, to float freely against the dollar, abandoning a long-standing policy of restricting currency movements. The real (BRR) has weakened to BRR1.55 against the dollar around midsession Monday, from BRR1.21 just before the government started tinkering with the exchange policy last Wednesday. With the exchange-policy shift, Cardoso said, "Brazil is paving the way to free itself up," in a reference to the country's huge dependence on foreign capital in the past. "Before we used to focus on the forex policy, but now we have to look inward," Cardoso said. Cardoso also vowed to control the inflation that many have predicted will result from the effective devaluation. "I have a lot of experience as a finance minister, when inflation was 1,000% per year," Cardoso said, referring to his stint as finance minister under Itamar Franco. The president, who appeared calm and in good spirits, said the focus of his government now will be to increase the purchasing power of Brazilian workers. Cardoso also stressed the need to boost exports and fight protectionist barriers. -By Adriana Arai; (55-11) 813-1988; aarai@ap.org

To: Steve Fancy who wrote (11881)	1/18/1999 11:40:00 AM
From: Steve Fancy	Respond to of 22640

Brazil's Malan:Move To Free Float Rules Out Currency Board Dow Jones Newswires (Corrected 1558GMT) WASHINGTON -- Brazil's Finance Minister Pedro Malan said Monday he didn't discuss an acceleration of financial support with the International Monetary Fund during meetings over the past two days. Malan said Brazil has moved to a floating exchange rate, and said the government must "redouble" its efforts at implementing a range of fiscal reforms. "Monetary policy in the near future will promptly respond to (any) significant depreciation of the exchange rate and ensure low inflation," Malan told a media briefing at the IMF. However, the finance minister acknowledged that some "parameters" of Brazil's existing fiscal reform strategy will need to be adjusted to reflect the move to a floating exchange rate.

To: Steve Fancy who wrote (11881)	1/18/1999 11:44:00 AM
From: Steve Fancy	Respond to of 22640

Brazil Stock UPDATE: Bovespa Up 495.34 at 7,242.08 Sao Paulo, Jan 18 (Bloomberg Data) -- Brazil's benchmark stock index, the Bovespa, was 7.34 percent higher at 30 minutes after the hour. The Bovespa was up 495.34 at 7,242.08. Gains in Telecom Brasil-Pfd Receipts, Telec De Sao Paulo Sa-Pref and Petroleo Brasileiro S.A.-Prf helped push the index higher. Elsewhere, Rio de Janeiro's IBV index was up 3,809.00 at 24,328.00. Tele Leste Celular Part-Pref, up 0.04 at 0.68, was the most actively traded Brazilian stock. The next most active issues were Inepar Sa-Industria E Con-Pr, unchanged at 0.49; Telecom Brasil-Pfd Receipts, up 9.50 at 108.50; Telemig Celular Partici-Pref, up 0.04 at 1.39; and Cia Eletric Est Rio Janeiro, unchanged at 0.22. The Bovespa opened at 6,759.67, up 0.19 percent from its previous close. Its high for the day was 7,342.36, and its low was 6,484.93. The Brazilian real weakened against the dollar. It traded at 1.5150 to the dollar, compared with 1.4300 in late Brazilian trading the previous day. (Story illustration: For graphs of the Bovespa index's recent performance, a list of today's best and worst performing stocks, returns and other information, enter IBOV BQ. For the same information about the IBV index, enter IBV BQ. For a list of stocks that reached 52-week highs and lows the previous day, enter HILO BZ. For more on Telebras preferred, enter TEL4 BS BQ. For Brazilian stock market news, enter NI BST. For other stock market news, enter N, BBNM or BBN5. For a table of world equity indexes, enter WEI. For market performance graph, enter WEIS. For Latin American user manual, enter MLAT. For a graph of the real vs. the dollar: BRC GP.) -0- (BN ) Jan/18/1999 11:30 -------------------------------------------------------------------------------- © Copyright 1999, Bloomberg L.P. All Rights Reserved.

To: Steve Fancy who wrote (11881)	1/18/1999 11:45:00 AM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

The drop in the real seems over done at approx 22% since this fiasco started. Any comments on this or the mornings news? Sometimes I feel I'm on a ghost thread, despite the heavy readership I know goes on behind the scenes. sf

To: Steve Fancy who wrote (11881)	1/18/1999 11:51:00 AM
From: Steve Fancy	Respond to of 22640

Brazil's Malan sees no early cut in interest rates Monday January 18, 10:54 am Eastern Time WASHINGTON, Jan 18 (Reuters) - Brazil's Finance Minister Pedro Malan said on Monday that interest rates were unlikely to fall soon following his country's decision to allow the currency, the real, to float. Malan, speaking to reporters after weekend meetings with officials from the International Monetary Fund and the U.S. Treasury, said IMF-backed changes to tax and spending rules were an essential precondition to lower interest rates. Malan said Brazil needed to redouble its efforts on the fiscal front. He said some of the parameters of Brazil's multi-billion dollar rescue program with the IMF would have to be revised to take account of the new exchange rate. But the minister said Brazil was not asking the IMF to accelerate payments from the package, which is worth a total of $41.5 billion. The next payment is expected sometime around the end of February. Brazil's central bank said earlier on Monday it would allow the real to float, abandoning a previous policy of holding the currency within a broad range against the dollar. The bank said it would intervene occasionally in a limited fashion to curb steep currency swings. Malan ruled out the idea of a rigid currency board for Brazil. This system, in place in neighboring Argentina, would hold the Brazilian currency at a fixed rate against the dollar and tie cash in circulation to central bank reserves. biz.yahoo.com

To: Steve Fancy who wrote (11881)	1/18/1999 11:52:00 AM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil rates should tighten to curb prices-Malan Monday January 18, 11:12 am Eastern Time WASHINGTON, Jan 18 (Reuters) - Brazilian Finance Minister Pedro Malan said on Monday there should be a tightening bias initially for Brazilian interest rates in order to curb inflation. ''I am recommending that the committee on monetary policy discuss a widening of the interest rate band to allow the active use of interest rates, with an initial upward bias that may be required to maintain low inflation,'' he said in a statement issued after a press conference in Washington.