/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/041123.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, November 23, 2004, Vol. 5, Issue 232 Headlines A N T I G U A & B A R B U D A LIAT: St. Vincent PM Calls On Governments to Shell Out Funds A R G E N T I N A AEROVIP: IOVC Acquires Majority Position C.M.S. S.R.L.: Enters Bankruptcy Following Court Ruling COMPANIA GENERAL: Court Authorizes Bankruptcy Proceeding FACHADAS INTEGRALES: Begins Liquidation Proceedings FONDOLISTO S.A.C.I.F.M.: Initiates Bankruptcy Proceedings GALUZ S.R.L.: Court OKs Voluntary Bankruptcy Motion ODISSEY S.R.L.: Proceeds with Liquidation to Repay Debts PETROBRAS ENERGIA: Fitch Comments On Merger TECSEL S.A.: Debt Payments Halted, Prepares To Reorganize TELECOM ARGENTINA: Consumer Agency Opposes Planned Changes UBOLDO S.A.: Claims Verification Deadline Approaches * ARGENTINA: Unlikely to Launch Debt Offering on Schedule B E R M U D A STUART BENSON LIMITED: Names Nicholas Hoskins as Liquidator B R A Z I L AES CORP.: Seeks to Redeem $170 Million of Debt Securities CEMIG: Board Endorses 30-Year Strategic Plan COPEL: Shares Rise on Planned Rate Increase M E X I C O HYLSAMEX: To Spend $6.8M In US Plant Construction P E R U INTERBANK: Fitch Upgrades Support Rating After Sovereign Action SPCC: Fitch Upgrades LTFC Rating To 'BB' TDP: Fitch Raises LTFC Rating To 'BB' * IMF Executive Board Completes Review on Peru - - - - - - - - - - ================================= A N T I G U A & B A R B U D A ================================= LIAT: St. Vincent PM Calls On Governments to Shell Out Funds ------------------------------------------------------------ Troubled airline LIAT is yet to receive the full amount of the bailout package pledged by four Caribbean governments. In July, four countries - Antigua, St. Vincent, Barbados and Trinidad - agreed on an EC$21.8-million (US$8.2 million) bailout package to help rescue the airline. Trinidad agreed to grant a five-year, EC$17 million (US$6.4 million) no-interest loan to help finance the package. Despite the December deadline for LIAT to use the money for restructuring its operations, only EC$5.7 million (US$2.1 million) from Antigua has been disbursed. The countries have been unable to finance the rest, according to St. Vincent Prime Minister Ralph Gonsalves. In this light, he is calling on the government to cough up the money. "If you have a community, you must have communication," he added. "And a critical form of communication is air transport." LIAT has received EC$23 million (US$ 8.5 million) in previous bailout funds. ================= A R G E N T I N A ================= AEROVIP: IOVC Acquires Majority Position ---------------------------------------- Investment fund IOVC, headed by Raul Arballo, has agreed to acquire a controlling position in Argentina's troubled airline Aerovip. Sebastian Agote, majority shareholder in the airline with 80%, informed that the share ownership the new partner will acquire has not been agreed on yet, but it is a fact that they will take the majority of the shares, while he will continue to head the company. Mr. Agote will, in this way, reassume the position he had left to Eduardo Aulet a month ago. On Monday, Mr. Arballo met with Aerovip's employees and said - among other things- that the company would resume flights next weekend. Mr. Agote revealed that the new partners will make a contribution of some US$10 million. Aerovip stopped flights approximately 20 days ago. C.M.S. S.R.L.: Enters Bankruptcy Following Court Ruling ------------------------------------------------------- Buenos Aires-based C.M.S. S.R.L. bankruptcy protection is now official after Court No. 18 of the city's civil and commercial tribunal, with the assistance of Clerk No. 36, ordered the company's liquidation. The bankruptcy order effectively transfers control of the company's assets to the court-appointed trustee who will supervise the liquidation proceedings. Infobae reports that the court selected Mr. Walter Calleja as trustee. He will be verifying creditors' proofs of claims until the end of the verification phase on March 17 next year. CONTACT: C.M.S. S.R.L. Maipu 474 Buenos Aires Mr. Walter Calleja, Trustee Lambare 1140 Buenos Aires COMPANIA GENERAL: Court Authorizes Bankruptcy Proceeding -------------------------------------------------------- Court No. 18 of Buenos Aires' civil and commercial tribunal declared Compania General de Servicios S.R.L. bankrupt after the company defaulted on its debt payments. The order effectively places the company's affairs as well as its assets under the control of court-appointed trustee Ruben Oscar Conti. As trustee, Mr. Conti is tasked with verifying the authenticity of claims presented by the company's creditors. The verification phase is ongoing until February 11, 2005. Infobae reports that the city's Clerk No. 36 assists the court on this case that will end with the disposal of the company's assets in favor of its creditors. CONTACT: Compania General de Servicios S.R.L. Avda Santa Fe 1460 Buenos Aires Mr. Ruben Oscar Conti, Trustee Avda Corrientes 1967 Buenos Aires FACHADAS INTEGRALES: Begins Liquidation Proceedings --------------------------------------------------- Fachadas Integrales S.R.L. of Buenos Aires will start liquidating its assets after Court No. 19 of the city's civil and commercial tribunal declared the company bankrupt. Infobae reveals that the bankruptcy process will commence under the supervision of court-appointed trustee Alfredo Donatti. The trustee will review claims forwarded by the company's creditors until December 13. Once all claims have been verified, the trustee will submit the individual reports for court approval on February 24, 2005. The general report submission follows on April 11, 2004. Clerk No. 38 assists the court on this case. CONTACT: Fachadas Integrales S.R.L. Aguilar 2547 Buenos Aires Mr. Alfredo Donatti, Trustee Montevideo 31 Buenos Aires FONDOLISTO S.A.C.I.F.M.: Initiates Bankruptcy Proceedings --------------------------------------------------------- Court no. 15 of Buenos Aires' civil and commercial tribunal declared Fondolisto S.A.C.I.F.M. "Quiebra," reports Infobae. Ms. Marta Susana Serra, who has been appointed as trustee, will verify creditors' claims until February 4, 2005 and then prepare the individual reports based on the results of the verification process. Clerk No. 29 assists the court on the case that will close with the liquidation of the Company's assets to repay creditors. CONTACT: Ms. Marta Susana Serra, Trustee Donato Alvarez 984 Buenos Aires GALUZ S.R.L.: Court OKs Voluntary Bankruptcy Motion --------------------------------------------------- Judge Tevez, working for Court no. 13 of Buenos Aires' civil and commercial tribunal declared Galuz S.R.L. bankrupt, says La Nacion. The Company asked for bankruptcy protection after defaulting on its debt payments since March of 2003. Dr. Basso, clerk no. 25, assists the court on the case that will conclude with the liquidation of the Company's assets. CONTACT: Galuz S.R.L. Montevideo 471 Buenos Aires ODISSEY S.R.L.: Proceeds with Liquidation to Repay Debts -------------------------------------------------------- Court no. 3 of Buenos Aires' civil and commercial tribunal, under Judge Herrera, approved Odissey S.R.L.'s request for voluntary liquidation. La Nacion Reports that the request was made after the Company defaulted on debts payments since March 2003. Dr. Gutierrez Huertas, the city's clerk no. 6, assists the court on this case. CONTACT: Odissey S.R.L. Montevideo 471 Buenos Aires PETROBRAS ENERGIA: Fitch Comments On Merger ------------------------------------------- Fitch Ratings views the re-organization of Petroleo Brasileiro S.A.'s (Petrobras) assets in Argentina, in which Petrobras Energia S.A. (PE) will absorb certain assets in exchange for direct shares in PE as slightly positive for PE. The international local and foreign currency ratings of PE remain unchanged at 'B', and its national rating remains unchanged at 'A+ (arg)'. The Rating Outlook for both companies is Stable. Under the reorganization, PE will assume Petrobras' 100% owned oil producing subsidiaries, Petrobras Argentina S.A. and Petrolera Santa Fe S.R.L., and its distribution subsidiary Eg3 S. A. In return of those assets, Petrobras will receive 230 million shares of PE, increasing its total equity interest in PE to 67.3% from 57.6%. The merger will be effective since January 1, 2005 and it is subject to the approval of the shareholders meeting of PE. The transaction is expected to be completed in the second quarter of 2005. As a result of the merger, PE will increase its oil and gas production by 11% and its reserves volumes by 9%. Also, the company will almost double its refining capacity to 67,000 barrels per day from its current level of 36,000 bpd and will incorporate a network of approximately 700 retail service stations. The additional refining capacity will increase PE's natural hedge, since more than 90% of its daily oil production in Argentina could be utilized internally. The merger is expected to have a positive impact on PE's cash flow, with a marginal impact in terms of financial debt. Notwithstanding these improvements, the company's credit profile continues to reflect fallout from Argentina's sovereign crisis. The ongoing sovereign default, the shift in government policies away from market-oriented frameworks, and the government's continued lack of addressing systemic sector problems remain as constraints, primarily on the international rating. At this time, the likelihood of further government interference is uncertain, although these risks could ease should the Argentine government reach an agreement with creditors and the International Monetary Fund (IMF). PE is one of the most vertically integrated energy conglomerates in Latin America with operations encompassing virtually all segments of the energy value chain. Core business activities, in order of importance, include oil and gas exploration and production; refining and marketing; petrochemicals; and electricity. PE is controlled by Petrobras Energia Participaciones S.A. (Participaciones), a holding company controlled by Brazil's national oil company, Petrobras. PE constitutes Participaciones' sole operating asset. PE is consolidated as a Petrobras subsidiary, and its obligations are nonrecourse to the Brazilian parent. Fitch rates Petrobras' senior unsecured foreign currency obligations 'BB-' with a Stable Rating Outlook. TECSEL S.A.: Debt Payments Halted, Prepares To Reorganize --------------------------------------------------------- Judge Braga, serving for Court no. 22 of Buenos Aires' civil and commercial tribunal, is now analyzing whether to grant Tecsel S.A. approval for its petition to reorganize. La Nacion reports that the Company asked for reorganization after defaulting on its debt obligations since November 11 this year. Dr. Julianelli, the city's Clerk no. 44, assists the court on the Company's case. CONTACT: Tecsel S.A. Labarden 145 Buenos Aires TELECOM ARGENTINA: Consumer Agency Opposes Planned Changes ---------------------------------------------------------- Argentina's consumer advocacy agency issued an injunction banning fixed-line carrier Telecom Argentina (TEO) from initiating planned changes in its high-speed Internet service, reports Dow Jones Newswires. The move came in response to Telecom Argentina's earlier announcement that it would double the transmission speed for its clients. The company also said it has eliminated its old flat- rate system, which according to the Undersecretary for Defense of the Consumer, would mean that starting June next year, clients would pay ARS15 plus value-added tax for each gigabyte they used over an assigned limit. "The aim of the company is to apply these changes to its entire network of clients, in a unilateral form and without the consent or acceptance from (the clients)," the agency said in a statement Agency officials also expressed doubts over Telecom Argentina's transmission-doubling plan. "Not even 'average' speeds can be assured for users" because results will vary according to network traffic and the capabilities of individual computers, the statement added. UBOLDO S.A.: Claims Verification Deadline Approaches ---------------------------------------------------- Mr. Orlando Omar Vegega, the trustee supervising the liquidation of Uboldo S.A., will close the verification of creditors claims on Thursday, November 25, 2005. Failure to submit proof of claims within the verification period will mean disqualification from the post liquidation distributions that will be made. Court no. 11 of Buenos Aires' civil and commercial tribunal handles this case with assistance from the city's clerk no. 21. CONTACT: Mr. Orlando Omar Vegega, Trustee Aguirre 666 Buenos Aires * ARGENTINA: Unlikely to Launch Debt Offering on Schedule --------------------------------------------------------- Argentina is likely to miss its Nov. 29 deadline to start restructuring $100 billion in defaulted debt, Bloomberg reports, citing the Bank of New York Co. In a letter to Argentina's Finance Secretary Guillermo Nielsen, the BNY, which is serving as exchange agent for the transaction, said the country had changed the structure of the exchange repeatedly, making it impossible to set up mechanisms for the swap by the scheduled start date. "It has become evident to BNY that we have passed the juncture at which a November 29th launch date is possible," the letter said. The BNY's withdrawal could mean a delay in Argentina's bid to restructure its debt and regain access to international credit markets. The disclosure comes after the economy ministry said it got word Thursday from the Italian regulatory agency, known as Consob, that it did not foresee approval of the offering documents in that country until some time in the second half of December. There was no explanation given for that delay and no mention was made of the government's expectations for approval by the U.S. Securities and Exchange Commission, which was the first foreign regulator to receive Argentina's final offering documents on Nov. 1. ============= B E R M U D A ============= STUART BENSON LIMITED: Names Nicholas Hoskins as Liquidator ----------------------------------------------------------- IN THE MATTER OF THE COMPANIES ACT 1981 and IN THE MATTER OF Stuart Benson Limited At a Special General Meeting of the Members of Stuart Benson Limited, duly convened and held at the Offices of the Company, Hamilton, Bermuda, on November 19, 2004 the following Resolutions were passed: a) that the Company be wound up voluntarily pursuant to the provisions of The Companies Act, 1981; and b) that Nicholas Hoskins be appointed Liquidator for the purposes of such winding-up, such appointment to be effective forthwith. The Liquidator informs that: - Creditors of Stuart Benson Limited, which is being voluntarily wound up, are required, on or before December 15, 2004 to send their full Christian and Surnames, their addresses and descriptions, full particulars of their debts or claims, and the names and addresses of their attorneys (if any) to the Liquidator of the said Company at Wakefield Quin, Chancery Hall, 52 Reid Street, Hamilton, Bermuda and if so required by notice in writing from the said Liquidator, and personally or by their attorneys, to come in and prove their debts or claims at such time and place as shall be specified in such notice, or in default thereof they will be excluded from the benefit of any distribution made before such debts are proved. - A Final General Meeting of the Members of Stuart Benson Limited will be held at the offices of Wakefield Quin, Chancery Hall, 52 Reid Street, Hamilton, Bermuda on December 22, 2004 at 11:00 a.m., or soon as possible thereafter, for the purposes of: having an account laid before them showing the manner in which the winding-up has been conducted and how the property of the Company has been disposed of and of hearing any explanation that may be given by the Liquidator; determining by Resolution the manner in which the books, accounts and documents of the Company and of the Liquidator thereof, shall be disposed of; and by Resolution dissolving the Company. CONTACT: Mr. Nicholas Hoskins, Liquidator Chancery Hall 52 Reid Street Hamilton, Bermuda =========== B R A Z I L =========== AES CORP.: Seeks to Redeem $170 Million of Debt Securities ---------------------------------------------------------- The AES Corporation (NYSE:AES) announced Friday it has called for redemption $331.4 million aggregate principal amount of its outstanding debt securities, including all outstanding 10% Senior Secured Notes due 2005 ($152.6 million aggregate principal amount), all outstanding 8 3/8% Senior Subordinated Notes due 2007 ($113.3 million aggregate principal amount) and a portion of its 8 1/2% Senior Subordinated Notes due 2007 ($65.5 million aggregate principal amount). "With this redemption, we have achieved our 2004 goal of paying down $800 million of debt. This is an important milestone in AES's financial plan as we continue to strengthen our capital structure and improve our credit quality," said Barry Sharp, Executive Vice President and Chief Financial Officer. The 10% Senior Secured Notes due 2005 and 8 3/8% Senior Subordinated Notes due 2007 will be redeemed at par, plus accrued and unpaid interest to the redemption date. The 8 1/2% Senior Subordinated Notes due 2007 to be redeemed will be selected by lot and will be redeemed at a redemption price of 101.417% of the principal amount thereof, plus accrued and unpaid interest to the redemption date. The redemption date for all such Notes is December 20, 2004. The redemption of these Notes is being made pursuant to the optional redemption provisions under the respective indentures. AES is a leading global power company, with 2003 revenues of $8.4 billion. AES operates in 27 countries, generating 44,000 megawatts of electricity through 111 power facilities and delivers electricity through 17 distribution companies. Our 30,000 people are committed to operational excellence and meeting the world's growing power needs. CONTACT: AES Corporation Media Contact: Mr. Robin Pence Phone: 703-682-6552 or Investor Inquiries: Mr. Scott Cunningham Phone: 703-682-6336 Web Site: http://media@aes.com/ CEMIG: Board Endorses 30-Year Strategic Plan -------------------------------------------- The meeting of the Board of Directors of Cemig held at the Company's head office November 19 approved the Strategic Guidelines Master Plan that will orient the company's business for the next 30 years. The Strategic Plan is oriented by the principles of secure sustainable growth and addition of value, and provides for expansion of Cemig's generation capacity and its transmission and distribution networks. To ensure that growth is sustainable, the plan imposes very conservative indebtedness limits. Another highlight of the meeting was the new dividend policy, based on 50% payout of distributable net profit, with extraordinary dividends whenever there is free cash available. The Plan also includes a solution for the issue of the credits under the CRC (Results Compensation) Account. Under the solution adopted, the repayments due to Cemig will be made by means of Cemig retaining dividends payable to the State of Minas Gerais. Cemig and the State are finalizing discussions of the fourth amendment to the contract for concession of the CRC credits. The matters requiring approval by either the Legislative Assembly of the State of Minas Gerais or the Brazilian electricity regulator (Aneel) will be duly submitted to these two bodies. CONTACT: Companhia Energetica de Minas Gerais - CEMIG Av.Barbacena 1200 Santo Agostinho - CEP 30190-131 COPEL: Shares Rise on Planned Rate Increase ------------------------------------------- Shares of Cia. Paranaense de Energia (COPEL, Brazil's second- largest combined power generator and distributor, rose to a nine-month high Friday after it revealed plans to raise rates before year-end. Bloomberg reports that Copel's shares soared 7.1% to close at BRL12 on the Sao Paulo stock exchange, its highest close since Jan. 28. Chief Executive Paulo Pimentel disclosed that the utility, seeking to boost profits, will boost rates 14.43% by ending discounts given to its customers. In addition, the company also plans to start adjusting its rates by the full amount authorized by the regulator Aneel starting next year. "If Copel ends up implementing such rate increase, it will boost its revenue and reduce the risk perception for the company," said Pedro Batista, an equity analyst for Rio de Janeiro- based Banco Pactual SA. Batista has a ``buy'' rating for the stock. CONTACT: Companhia Paranaense de Energia - Copel Investor Relations Department Mr. Ricardo Portugal (55-41) 331-4311 Mr. Alves Solange Maueler Gomide (55-41) 331-4359 E-Mail: ri@copel.com Web Site: www.copel.com =========== M E X I C O =========== HYLSAMEX: To Spend $6.8M In US Plant Construction ------------------------------------------------- Mexican iron and steel company Hylsamex (BMV: HLYSAMXB) will invest US$6.8 million in the construction of its first processing plant in the U.S., reports Business News Americas. The plant, which will be sited in Shelbyville, Indiana, is expected to begin operations in August 2005 and generate US$40 million worth of sales annually. It will produce approximately 1.2M sq. m. of insulated metal paneling every year, which is principally used in the construction of cold-storage rooms. Mexican conglomerate Alfa, Hylsamex's controller, is in the process of splitting its shares in the steel company, which posted net profits of US$119 million in the third quarter of 2004, turning round a US$24-million net loss in the same period last year. CONTACT: Othon Diaz Del Guante (52-81) 8865-1240 E-mail: odiaz@hylsamex.com.mx Ismael De La Garza (52-81) 8865-1224 E-mail: idelagarza@hylsamex.com.mx ======= P E R U ======= INTERBANK: Fitch Upgrades Support Rating After Sovereign Action --------------------------------------------------------------- Fitch Ratings has upgraded the support rating of Peruvian bank Interbank to '3' from '4' and affirmed the bank's remaining ratings as follows: --Long-term foreign currency 'BB-'; --Short-term foreign currency 'B'; --Rating Outlook Positive; --Long-term local currency 'BB-'; --Short-term local currency 'B'; --Individual 'D'. The improved support ratings follow the upgrade of Peru's foreign currency rating to 'BB' from 'BB-'. In Fitch's view, considering the stronger creditworthiness of the sovereign, there is improved capacity to support the bank. Therefore, Fitch believes there is a moderate probability of support, were it ever needed. The Peruvian authorities have a vested interest in supporting Interbank, given its importance to the system. SPCC: Fitch Upgrades LTFC Rating To 'BB' ---------------------------------------- Fitch Ratings has upgraded the long-term foreign currency rating of Southern Peru Copper Corporation (SPCC) to 'BB' from 'BB-'. The Rating Outlook is Stable. The rating action follows the upgrade of Fitch's sovereign rating of Peru and country ceiling to 'BB' from 'BB-', with a Stable Rating Outlook, which reflects the recent passage of pension reform and sustained robust macroeconomic and fiscal performance. Peru's GDP growth is forecast to remain solid at 4.5% in 2004, following growth above 4% in the prior two years. Both SPCC and TDP remain constrained by Peru's country ceiling at 'BB'. SPCC's 'BB' foreign currency rating is supported by the company's competitive cost structure and favorable market position as a leading copper producer and exporter. As a relatively low-cost producer, SPCC is able to remain competitive during the troughs in the price cycle. SPCC is planning to fund an upcoming $300 million modernization project for its Ilo copper smelter primarily with available cash balances of over US$400 million as of Sept. 30, 2004. The three-year project aims to bring the company's Ilo smelter operations into compliance with the established environmental standards by capturing no less the 92% of sulfur dioxide emissions. Fitch understands that the pending acquisition of affiliate company Minera Mexico S.A. de C.V. (Minera Mexico) by SPCC will likely involve a cashless stock-for-stock transaction. In the event the proposed transaction was not cashless and Minera Mexico's debt is rebalanced between it and SPCC, Fitch would not expect the underlying credit quality (local currency rating) of SPCC to deteriorate to a level below the foreign currency rating of Peru. SPCC is one of the world's largest private-sector copper producers and exporters; approximately 95% of the company's production primarily goes to the U.S. and Europe. SPCC's operations are located in southern Peru and consist of two large-scale, open-pit, copper-mining units, Toquepala and Cuajone, along with integrated smelting and refining facilities in the port town of Ilo. SPCC produced 375,000 tons of copper in 2003 and generated revenues of nearly US$800 million. The company is owned by Grupo Mexico (54%), Phelps Dodge (14%), Cerro Trading Co. (14%), and public stockholders (18%). TDP: Fitch Raises LTFC Rating To 'BB' ------------------------------------- Fitch Ratings raised the long-term foreign currency rating of Telefonica del Peru, S.A.A. (TDP) to 'BB' from 'BB-'. The Rating Outlook is Stable. The rating action follows the upgrade of Fitch's sovereign rating of Peru and country ceiling to 'BB' from 'BB-', with a Stable Rating Outlook, which reflects the recent passage of pension reform and sustained robust macroeconomic and fiscal performance. Peru's GDP growth is forecast to remain solid at 4.5% in 2004, following growth above 4% in the prior two years. Both SPCC and TDP remain constrained by Peru's country ceiling at 'BB'. TDP's 'BB' foreign currency rating is based on the company's solid business position as the largest Peruvian telecommunications, diversified revenue stream from its various business segments, healthy cash flow generation, relatively low capital expenditure needs, and a strong financial profile. TDP's existing local currency rating of 'BBB+' remains unchanged. TDP's local-service business, which accounts for more than 40% of consolidated revenues, provides the company with a relatively stable source of cash flow. TDP currently has a 98% market share in the local service business. TDP's financial profile is expected to remain consistent with the rating category despite heightened competition and lower long distance and local service tariffs due to recent debt reductions and solid free cash flow generation of over $200 million annually that provides the company with a degree of financial flexibility. Following debt reduction of over 50% over the past three years, EBITDA/interest expense is strong at 14.1 times (x), while debt/EBITDA is currently under 1.0 times (x). TDP generated $1.0 billion of revenues and $478 million of EBITDA during 2003. The company participates in several segments, including fixed local service (43% of revenues during the first nine months of 2004), public telephony (20%), domestic and international long distance (9%), cable TV (10%), and business communications (8%), among other segments (10%). The company is 97% owned by Telefonica S.A of Spain (TEF). * IMF Executive Board Completes Review on Peru ---------------------------------------------- The Executive Board of the International Monetary Fund today completed the first review of Peru's economic performance under a 26-month Stand-By Arrangement originally approved on June 9, 2004. The Board also approved the modification of a structural performance criterion and a waiver for the nonobservance of a performance criterion. The completion of the review makes available for drawing a total equivalent to SDR 126.06 million (about US$191.2 million), but the Peruvian authorities intend to continue treating the arrangement as precautionary. Following the Executive Board discussion, Agust�n Carstens, Deputy Managing Director and Acting Chair, said: "The Peruvian economy continues to perform well. Economic activity is robust, inflation remains low, and the external position is strong. The outlook for next year and the medium term is positive, as prudent macroeconomic policies and structural reforms are expected to continue to be implemented. Peru has built important buffers to mitigate vulnerabilities, including a comfortable level of international reserves and a well-capitalized banking system. The national consensus on prudent policies and reform needs to be preserved in order to further reduce the vulnerabilities associated with Peru's public debt and financial dollarization, and thereby help set the basis for Peru's strategy for exiting from Fund-financial support. "Preserving macroeconomic stability and promoting poverty reduction continue to be co-objectives of the authorities. The 2004 fiscal target is well within reach and the draft 2005 budget aims at further fiscal consolidation. Since wage pressures are expected to remain strong in the months ahead, it will be important to prepare contingency measures to ensure compliance with the 2005 fiscal targets. "The central bank remains committed to keeping inflation low. Allowing the exchange rate to move more freely is important, among other things, to limit the costs of sterilized intervention and avoid the risks associated with one way bets to capital inflows. "Several growth-enhancing reforms are under way, and the authorities are committed to addressing the delays registered in some areas of the structural reform agenda. The authorities' focus has been on awarding infrastructure transportation in concession to the private sector and reforming the preferential public pension regime. The planned establishment of a commercial court by end-2004 will help enhance the business climate. In addition, private sector investment is expected to be boosted with the awarding of two major roads in concession by end-April 2005. Other important structural areas in which progress has been made include completing a census of government employees and pensioners and taking the first step toward reducing labor costs by eliminating the special payroll tax by year-end," Mr. Carstens said. CONTACT: INTERNATIONAL MONETARY FUND 700 19th Street, NW Washington, D.C. 20431 USA IMF EXTERNAL RELATIONS DEPARTMENT Public Affairs: 202-623-7300 - Fax: 202-623-6278 Media Relations: 202-623-7100 - Fax: 202-623-6772 *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter - Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and Lucilo Junior M. Pinili, Editors. Copyright 2004. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *