Citing Strengthened Economy, Brazil Central Bank Will End Formal Request That Banks Maintain Trade & Interbank Lines.

NEW YORK--(BUSINESS WIRE)--Aug. 10, 1999--

The following statement was released today by the Central Bank of Brazil:

"In March 1999, international banks led by five regional coordinating banks agreed to Brazil's request to maintain their trade and interbank lines at February 28, 1999 levels. These banks were Bank of Tokyo-Mitsubishi, Banque Paribas, Citibank, Deutsche Bank and HSBC Holdings. Later on, Caixa Geral de Depositos and Banca Commerciale Italiana were chosen as coordinators in their respective countries.

"Citing the strengthening of the Brazilian economy and renewed confidence in the country, as demonstrated by banks' voluntary increase of trade and interbank lines to Brazil, the Brazilian economic authorities are addressing all participating banks to announce that, from September 1st onwards, it will no longer be necessary to formally ask foreign commercial banks to maintain their trade and interbank lines to Brazil as originally requested in March. Instead, they will rely on market conditions going forward.

"The Brazilian authorities noted that developments in the Brazilian economy since March have been significantly better than expected. Sound monetary and fiscal policies have led Brazil to fulfill the targets agreed in the IMF program. GDP has begun to recover at the end of the first quarter of 1999, inflation has performed significantly better than projected, the current account deficit was reduced, developments in the capital account have exceeded expectations and FDI flows have shown considerable strength. The President of the Central Bank, Arminio Fraga, noted that the positive response of the banks to Brazil's request had an initial stabilizing effect and was a critical element in Brazil's economic improvement. The establishment of a system to monitor bank lines was a productive initiative. We will keep it operating, he added. The Central Bank will also maintain a close dialogue with individual banks and expects banks to continue to respond as positively as they have done in the last six months. Mr. Fraga also expressed the recognition of Brazil to the role played by the IMF, the BIS, as well as by Central Banks and Ministries of Finance that participated in the establishment and implementation of the monitoring process.

"William R. Rhodes, Vice Chairman of Citigroup and Citibank, welcomed Brazil's announcement. Mr. Rhodes, who was asked by Brazil to help implement the request as worldwide and North America coordinator, stated that the banks' response was very positive. 'In fact, a number of banks not only maintained but also increased their trade and interbank lines,' Mr. Rhodes noted. He recalled that the country's economic progress during this period permitted the Government of Brazil to return to the international markets last April."