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Economic news bolsters debt.

SAO PAULO -- Brazilian debt continued to rebound this week, with the '05 bond rising as high as 92 1/2, with the yield falling to 12.08%, following Tuesday's release by the Banco Central do Brasil (BCB) of July's fiscal accounts. Markets were pleased to see this month's 2.7 billion real primary surplus, which came in well above estimates of 2.2 billion reals although fell short of June's impressive 3.4 billion real figure. Given the stronger than expected numbers the sovereign should easily meet its IMF prescribed target of 3.35% of GDP for 2001 - in fact on a 12-month trailing basis, the surplus now stands at 4% of GDP.

However, Tim Kearney, senior Latin America economist for Bear Stearns, in New York, points out that, despite these apparently impressive figures, the overall fiscal position in Brazil is clearly deteriorating, with the nominal fiscal deficit rising to 6.2% of GDP in July, the highest since December 1999, and 2% higher than a year ago. This alarming rise in the country's debt burden can only compound the problem of high interest rates, with the Selic rate at 19%, and the deteriorating economic fundamentals, which threaten to plunge the country into recession. Furthermore, the real's continuing decline can only add to these pressures.
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Title Annotation:economic conditions in Brazil
Publication:America's Insider
Article Type:Brief Article
Geographic Code:3BRAZ
Date:Aug 30, 2001
Words:215
Previous Article:Opposition protests against cuts.
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