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BRAZIL.

BRAZIL
 % Change

 Interest
Date CPI M1 Rate (%)

 1990 1,794.8 2,350.0 -
 1991 460.0 300.0 900.0
 1992 1,147.0 913.0 1,180.0
 1993 1,600.0 600.0 -
 1994 800.0 200.0 1,600.0
 1995 20.0 25.0 70.0
 1996 10.0 -15.0 35.0
 1997 4.8 5.0 22.0
 1998 -18.0 1.0 38.0
 1999 9.1 15.0 26.6

Jan 0.5 - 41.0
Feb 1.4 - 45.0
Mar 0.6 - 42.0
Apr 0.5 - 32.0
May -0.4 - 24.5
Jun 0.8 - 21.0
Jul 1.1 - 20.3
Aug 0.7 - 19.2
Sep 0.9 - 19.1
Oct 1.1 - 18.8
Nov 1.5 - 18.7
Dec 0.5 - 18.8

 2000 4.4 8.0 16.5
Jan 0.6 - 19.0
Feb -0.2 - 19.0
Mar 0.2 - 18.5
Apr 0.1 - 18.5
May 0.0 - 18.5
June 0.2 - 17.5
Jul 1.4 - 16.5
Aug 1.6 - 16.5
Sep 0.3 - 16.5
Oct 0.0 - 16.5
Nov -0.1 - 16.5
Dec 0.3 - 15.8

 2001 4.5 7.0 15.0
Jan 0.4 15.3
Feb. 0.1 15.3
Mar 0.51 15.75
Column
Number [1] [2] [3]

 (In millions US $)

 Trade Current
Date Imports Exports Bal Acct Bal

 1990 20,478.0 31,378.0 10,900.0 1,790.0
 1991 21,584.0 32,486.0 10,902.0 2,000.0
 1992 20,542.0 36,207.0 15,665.0 6,450.0
 1993 24,870.0 38,821.0 14,300.0 2,000.0
 1994 33,535.0 43,659.0 10,124.0 -1,000.0
 1995 50,000.0 46,900.0 -3,100.0 -17,000.0
 1996 52,900.0 47,700.0 -5,540.0 -15,000.0
 1997 62,080.0 53,090.0 -8,990.0 -33,800.0
 1998 57,550.0 51,120.0 -6,430.0 -34,900.0
 1999 49,138.0 48,483.0 -655.0 -27,000.0

Jan 3,700.0 2,940.0 -154.0 -
Feb 3,050.0 3,270.0 249.0 -
Mar 4,050.0 3,830.0 -220.0 -
Apr 3,670.0 3,700.0 300.0 -
May 4,070.0 4,380.0 312.0 -
Jun 4,450.0 4,310.0 -144.0 -
Jul 4,023.0 4,117.0 94.0 -
Aug 4,458.0 4,770.0 -101.0 -
Sep 4,254.0 4,187.0 -67.0 -
Oct 4,458.0 4,304.0 -154.0 -
Nov 4,531.0 4,002.0 -529.0 -
Dec 4,424.0 4,673.0 249.0 -

 2000 55,777.0 55.086.0 -691.0 -24,000.0
Jan 3,569.0 3,453.0 -94.0 -
Feb 4,047.0 4,123.0 78.0 -
Mar 4,451.0 4,472.0 42.0 -
Apr 3,995.0 4,181.0 183.0 -
May 4,700.0 5,063.0 392.0 -
June 4,605.0 4,861.0 258.0 -11,300.0
Jul 4,887.0 5,003.0 118.0 -12,706.0
Aug 5,423.0 5,519.0 97.0 -
Sep 5,046.0 4,724.0 -320.0 -24,800.0
Oct 5,162.0 4,638.0 -523.0 -24,680.0
Nov 5,020.0 4,390.0 -630.0 -
Dec 4,872.0 4,659.0 - -

 2001 61,000.0 62,000.0 1,000.0 -26,000.0
Jan 5,017.0 4538.0 -479.0
Feb. 4,003.0 4083.0 80.0 -1,600.0
Mar 5,446 5,167 -279
Column
Number [4] [5] [6] [7]

 In millions
 US $)
 Exchange Rate
Date Reserves Off/Par

 1990 8,751.0 172.0 190.0
 1991 8,552.0 1,090.0 1,120.0
 1992 19,893.0 12,241.0 14,600.0
 1993 23,000.0 320.0 325.0
 1994 36,471.0 0.9 0.9
 1995 50,000.0 1.0 1.0
 1996 58,000.0 1.0 1.0
 1997 51,000.0 1.1 1.1
 1998 44,600.0 1.2 1.2
 1999 36,353.0 1.8 2.0

Jan 36,400.0 2.1 2.0
Feb 35,600.0 2.0 2.1
Mar 34,600.0 1.7 1.7
Apr 44,300.0 1.7 1.7
May 44,300.0 1.7 1.8
Jun 43,000.0 1.8 1.8
Jul 41,346.0 1.8 1.9
Aug 41,918.0 1.9 2.0
Sep 42,753.0 1.9 2.0
Oct 40,053.0 2.0 2.0
Nov 42,175.0 1.9 2.0
Dec 36,353.0 1.8 2.0

 2000 32,844.0 2.0 2.1
Jan 37,560.0 1.8 2.0
Feb 38,364.0 1.8 1.9
Mar 39,169.0 1.7 1.9
Apr 33,333.0 1.8 1.9
May 28,581.0 1.8 1.9
June 28,264.0 1.8 1.9
Jul 29,614.0 1.8 1.9
Aug 31,396.0 1.8 1.9
Sep 31,203.0 1.8 2.0
Oct 30,404.0 1.9 2.1
Nov 32,582.0 2.0 2.2
Dec 32,844.0 2.0 2.2

 2001 34,000.0 2.1 2.1
Jan 35,604.0 2.0 2.1
Feb. 35,450.0 2.0 2.1
Mar 34,390.0 2.15 2.21
Column
Number [8] [9] [10]

FOOTNOTES BY COLUMN: Annual figures for 2001 are projections. [1-2]:
Annual figures represent January-December increase. [3]:
Interest rates shown for 1998 are the effective nominal monthly rate
for 180 day loans. As of 1999, rate shown is Selic overnight rate. Annual
figures are monthly averages for year. [4-9]: Annual figures represent
values at year-end. 9: A new currency, the real, was introduced in July 1994.

SOURCES BY COLUMN: 1, 2, 4-9: Central Bank. As of 2000, inflation
figures are from IPC-FIPE.


FINANCIAL OUTLOOK

* Inflation will reach 1% for the first six months of 2001, an upward revision from 0.89%, according to the FIPE economics research institute. FIPE continues to forecast 4% for the year. The finance ministry has upped its 3.9% annual projection to 4.8%, but says the government will have no trouble meeting IMF targets. The increase is a result of price increases in foodstuffs, including milk, chicken and beans. Also adding fuel to the fire is a stronger dollar, though lower gasoline prices should provide some relief. Refinery prices dropped 5.1% on April, while retail prices could fall as much as 4.5%. In May, the government will increase the percentage of sugar cane-based ethanol from P0% to P4%, further lowering both the price and the amount of imported crude oil

* The benchmark Selic interest rate was lowered to 15.9.5% in January by the central bank, only to be increased to 15.75% in March as a result of concerns about spillover from the crisis in Argentina. Central bank president Arminio Fraga said that the interest rate hike resulted from growing worries over inflation. The move surprised analysts, who expected the central bank to keep rates steady during recent market turbulence. Some analysts think the bank should have waited to raise the rate, while others believe the January rate cut was based on overly optimistic projections, given the slowing of the US economy and the economic crises in Argentina and Turkey.

* The $80 million trade surplus in February was a surprise. But higher crude oil prices and low commodity prices pushed the trade balance back into negative territory through March. Lost production stemming from Petrohras' P-36 rig, which sank in March, may make the scenario worse. March's $279 million trade deficit already puts the total for the year at $678 million, which nearly surpasses last year's total deficit.

* Reserves have decreased from their January high. Some of the funds were used to pay for $250 million in Samurai bonds that matured in March. The rest was used by the central bank to help prop up the real in the currency market. The government expects to raise R4.485 billion ($2 billion) this year from privatizations. Among the companies slated to be privatized are Furnas, the IRB-Reinsurers of Brazil, and six state-owned banks currently controlled by the central bank, as well as shares of Petrobras and mining giant CVRD. Another R5.250 billion ($2.4 billion) is expected to come from the privatization of state and municipal companies.

* The real has dropped to its lowest level since it was created in 1994 because of uncertainty surrounding Argentina's financial situation. Other reasons cited for the recent lows in the currency are the trade deficit and difficulties on the part of Spain's Banco Santander in repurchasing stock in Sao Paulo state bank Banespa, which would inject dollars into the market. In mid-April, Santander worked out a deal with two shareholder groups that had opposed the buyback: Caixa Beneficente dos Funcionarios do Banespa (Cadesp), a fund owned by employees of Banespa, and Banesprev, the Banespa employee retirement fund.

ECONOMY MONITOR

* Growth Outlook: Predictions for 2001 remain optimistic, despite troubles in the US and Argentina. Finance minister Pedro Malan predicts growth of at least 4.2%. Other central government authorities forecast 4.5% but private experts say 3.5%.

* Political Factors: Although President Fernando Henrique Cardoso has regained a measure of popularity, he has been caught in a dispute that has threatened the government coalition and paralyzed congress. The death of PSDB leader (Cardoso's party) and Sao Paulo governor Mario Covas, and the weakening of the ruling coalition have complicated debates over presidential succession. Ceara state governor Tasso Jereissati and health minister Jose Serra are wing for the PSDB position. Corruption has also surged as a major issue with the news that over $1 billion had been siphoned from development agency Sudam. President Cardoso named Anadyr de Mendonca Rodrigues to a ministerial-level position with power to investigate government corruption.

* Fiscal Situation: The budget surplus hit nearly R603.1 million (approximately $273 million), clown 75% from last year. Two factors should help plump it back up. A new law will allow tax authorities to compare income tax returns with amounts collected from the financial transactions tax (CPMF) and to investigate filers who appear not to be paying taxes over to the government. Also, the CPMF was increased from 0.30% to 0.38%.

* Major Sectors: Industrial production continues to grow. The official IBGE statistics agency said in 2000 it hit 6.5%. Growth for 2001 could be hurt by an energy shortage. Unless the southeastern states receive above-average rainfall, production from hydroelectric plants will fall, potentially slowing industrial growth. Authorities are now investing in several thermoplants.

* Employment: Unemployment continues to drop, down year-on-year in February from 8.2% to 5.7% and overall the lowest since 1997. Sao Paulo rates fell nearly 3%, to 17%. Informal employment has also decreased.

* Stock Market: The chamber of deputies passed the minority shareholders law, which seeks to boost Brazil's capital markets by increasing minority shareholder rights, improving transparency and reducing the cost of capital. The Bovespa's "New Market" plans to launch its first IPO - for top software firm Microsiga - by June.

COMPANY MONITOR

* The Furnas electricity generator will be privatized per the Petrobras model, with the government retaining a "golden share." Last year, Furnas posted its best-ever results, including profits of R600 million ($272 million).

* Petrobras posted the highest-ever annual profit by a Brazilian company: R9.94 billion ($4.5 billion), up from R1.76 billion ($796 million) in 1999. A company spokesperson cited increased oil prices and production, and lower debt payments. But 2001 profits may be hurt by the sinking of platform 36 in March.

* Internet ISPs Zip.net (owned by Unibanco Private Equity and Portugal Telecom) and Universo OnLine (Folhapar, Editora Abril, Morgan Stanley, Latin Invest and CSFB) announced a merger worth $200 million in addition to share swaps.

* Telesp Celular, owned by Portugal Telecom, and Spain's Telefonica have announced a joint cellular venture. These two companies now have over 10 million customers in Brazil.

* Telcom Americas, a joint venture of Bell Canada, Mexico's America Movil, and SBC Communications, plans to purchase Tess, a cellular firm in rural Sao Paulo state, with some 940,000 subscribers.

* The Copene petrochemical group went to auction again on March 27 and once again failed to attract a buyer. The minimum price was $923 million, down slightly from the earlier minimum of $1.05 billion.

* Telemar, the fixed-line provider for 16 states (including Rio de Janeiro) announced that it quadrupled profits in 2000 as a result of increased line installation. The company's purchase of iG, Brazil's largest free Internet service provider, was finalized in March for nearly $20 million.

* After failing to attract bidders for the Band C cellular licenses, authorities sold Band D for R2.6 billion ($1.2 billion), a 20% premium. Telecom Italia took two of three regions, including Sao Paulo and the southern and western regions. Telemar won the other, which covers its fixed-line areas. The Band E auction, held on March 13, attracted only Telecom Italia, which paid R990 million ($448 million) for Area 1 (16 states including Rio de Janeiro, Espirito Santo, Minas Gerais and 13 others in the north and northeast). Areas 2 and 3 were not sold.
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Title Annotation:economic aspects
Publication:America's Insider
Geographic Code:3BRAZ
Date:Apr 30, 2001
Words:2298
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