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

To: md1derful who wrote (12347)	1/25/1999 2:37:00 PM
From: Steve Fancy	Respond to of 22640

BRAZIL CONGRESS WEEK-Votes sought to prop up real Reuters, Monday, January 25, 1999 at 13:32 By William Schomberg BRASILIA, Jan 25 (Reuters) - Brazil's Congress faces another action-packed week, the last of the current legislative session, as the government seeks to rush through votes on important fiscal bills in the hope of propping up the battered real currency. With Brazil's strong currency policy now abandoned after the Jan. 15 decision to float the real, President Fernando Henrique Cardoso is trying to convince skeptical markets that he can turn long-awaited budgetary reform into the new anchor of the economy. This week marks the end a special session of Congress running through the January recess. It also also the last before a new batch of lawmakers, elected in October, take office Feb. 1. Not much activity is expected during February, which is traditionally dominated by the Carnival holidays, meaning the government must make progress on outstanding measures in its 28-billion-reais austerity drive in the next few days. So far about 60 percent of the plan has been passed, but the measures still in Congress are seen as the hardest to approve. The Senate was scheduled to vote on Tuesday on an important pension reform bill that would raise contributions paid by federal civil servants and, more controversially, make retired public sector workers pay for their pensions for the first time. Last week's approval of the bill in the volatile lower house -- where it had been rejected four times previously -- was considered a major victory for the government, even if it failed to halt a slump in the real against the dollar. Many economists say the government will have to come up with extra fiscal measures to offset the higher debt costs implied by the sharp devaluation of the real. But the government has denied it plans further cuts or tax increases to counter the impact of the real's sharp depreciation, which fell from 1.21 against the dollar in mid-January to 1.78 in light trading on Monday. The pension bill was expected to meet little resistance in the upper house where the government enjoys a reliable majority. If approved Tuesday, the bill would come into effect in May and would generate about 3 billion reais in 1999, rising to 4 billion reais in 2000, according to official calculations. Last year, the deficit in the federal government's pension system was expected to hit nearly 20 billion reais, making it one of the biggest strains on the country's roughly 70-billion reais budget deficit, the fundamental problem of the economy. Also this week, the lower house was due to begin panel-level hearings on another important fiscal bill. It would nearly double a financial transactions tax called the CPMF to raise an estimated 15 billion reais a year. The bill represents a large chunk of the government's 28-billion-reais fiscal target in 1999. It was approved last week by the Senate, and whips are in a hurry to get it through the lower house. However, as a constitutional amendment requiring lengthy debate, it stands little chance of being approved before April and can only come into effect 90 days after that. Leaders of government-allied political parties were expected to meet with their opposition counterparts this week to discuss the possibility of speeding up action on the the bill. "Clearly the opposition is not going to agree but the issue could be resolved by a vote, perhaps on Tuesday," said a government official in the lower house. A bill cutting the time periods for each stage of the bill's progress through the lower house would require a simple majority in a vote on the lower house floor. More fiscal progress was expected on Wednesday when the lower house was due to vote on bills spelling out the small print of how cash-strapped states and municipalities may fire workers. The bills contain the regulations to implement a constitutional amendment to streamline the civil service which was approved by Congress last year. It is considered important because many local governments pay as much as 80 percent of revenues on payrolls, hampering efforts to rein in the public sector budget deficit. Also this week, the two houses of Congress were due to hold a joint session either Tuesday or Wednesday, to approve a slimmed down version of the 1999 federal budget. The budget plan was revised in November, as part of the government's pledge to cut costs in return for a massive international loans program, and included spending cuts of about 8.7 billion reais. Delays in approving the budget have not caused operating problems for the government which has powers to control spending on a month-by-month basis. Finally, interim Central Bank President Francisco Lopes was due to address a committee in the Senate which must approve his nomination. Lopes' appointment will also have to be approved in a full vote on the floor of the Senate. No date has been set for that full vote. william.schomberg@reuters.com)) Copyright 1999, Reuters News Service