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

To: wl9839 who wrote (11897)	1/17/1999 11:26:00 PM
From: wl9839	Respond to of 22640

The following Latin American mud slinging may provide a farcical sidelight to the very unfortunate grandstanding by Itamar. Sunday January 17, 5:54 pm Eastern Time Brazilian governor calls Mexican government corrupt BRASILIA, Jan 17 (Reuters) - Brazilian state governor Itamar Franco, whose actions contributed to the devaluation of Brazil's currency, dismissed criticism by Mexican President Ernesto Zedillo on Sunday, saying he should take care of his own problems first. ''I will not reply to a corrupt government like the Mexican government,'' Franco, governor MinasGerais state, told reporters. ''The president (of Mexico) should take care of his poor and his Chiapas,'' he said, referring to Mexico's southernmost state of Chiapas where Zapatista rebels launched an armed revolt five years ago pressing for improved indigenous rights. Zedillo, during a visit to Costa Rica last week, accused Franco of being irresponsible for declaring a moratorium on debt payments to the federal government. Franco's unilateral decision to stop debt payments chipped away at what little investor confidence remained in Brazil, contributing to massive dollar flight that forced the central bank to devalue last Wednesday and allow the currency to float on Friday. The long-running Brazilian crisis has roiled world markets and raised fears that if Latin America's largest economy stalls, others in the region, including Mexico, could be most vulnerable. The free-floating Mexican peso became the punching bag for fears over Brazil last year, devaluing around 20 percent against the dollar. Zedillo blasted Franco for putting personal political ambitions above the welfare of the country, calling him a ''merchant of misery'' and accusing him of ''demagoguery and cheap rhetoric''. The Mexican foreign ministry on Saturday backed the president for his ''legitimate'' criticism. ''In no way is it an act of intervention,'' said Foreign Minister Rosario Green. ''It is a motion of censure against an irresponsible, populist act by a state governor. It was a show of solidarity, a pat on the back for (Brazilian) President Fernando Henrique Cardoso.'' Friday's surprise free float was welcomed by world markets, relieved that Brazil had decided to bow to the will of foreign exchange dealers rather than spend billions of dollars defending the currency, the real.

To: wl9839 who wrote (11897)	1/17/1999 11:31:00 PM
From: wl9839	Read Replies (1) \| Respond to of 22640

Let us hope that Malan is right about the Congressional vote this week. Sunday January 17, 7:30 pm Eastern Time Brazil's Malan sees Congress voting fiscal reforms BRASILIA, Jan 17 (Reuters) - Brazilian Finance Minister Pedro Malan said in an interview published on Sunday that it was not true Congress was preventing urgent fiscal reforms from being approved, and that a crucial vote would take place this week. Malan also told Epoca news magazine some of the terms of a $41.5 billion bailout led by the International Monetary Fund and the U.S. Treasury would have to be reviewed following the devaluation of the real currency, ''but not the fiscal part.'' Epoca did not make clear whether it spoke to Malan before or after Friday's free-float of the real, once the proud linchpin of an economic stabilization plan that ended soaring inflation. Most of Malan's comments appeared to refer to last Wednesday's attempt at a controlled 8 percent devaluation. ''People always say the fiscal stabilization program isn't working. Many analysts say Congress isn't responding to the program. That's not correct; it's not true,'' Malan said. Investor patience with the world's eighth biggest economy ran out this month because of a series of indications that Brazil was having insurmountable trouble trying to narrow its 8 percent of gross domestic product public sector deficit. In December, Congress rejected a law that would have increased pension contributions from civil servants and levied pension contributions on retired civil servants. That blow was followed this month by a unilateral debt moratorium by Minas Gerais state on debt owed to the federal government. Malan said the amount of money involved was negligible but the use of the word moratorium spooked traders. ''It's an instinctive reaction for a trader,'' he said. Malan said the pension contribution proposal would be put to a new vote in Congress this week after government allies reached an accord on the measure. He also noted that 18 of Brazil's 27 state governors had declared they would not default on theirdebt to Brasilia. In addition, concerns that a special tax on financial transactions, known as the CPMF or check tax, would not start to be collected for several months should be removed by proposals to fill the income gap with funds from elsewhere.