Brasília, May 11, 2004 (Agência Brasil) - The deputy secretary of the Federal Treasury, José Antônio Gragnani, announced yesterday (10) that the Treasury will not auction debt titles while the market remains unstable. He also informed that the Treasury possesses sufficient cash to guarantee debt repayments for another three months. US$ 11.1 billion (R$ 35 billion) are scheduled to expire this month.

Gragnani attributed the nervousness of the market to the situation abroad, with the possibility that interest rates will rise in the United States. In his view, this volatility is temporary and unrelated to domestic circumstances. He recalled that other emerging countries have been suffering from the same complaint. He mentioned that, while the Brazil risk premium has risen 45.8% since April, the country risk premiums in Colombia and Turkey rose, respectively, 61.5% and 74.4%. The increase in Mexico and Russia was 41%. The secretary also observed that a Brazil risk premium in excess of 800 points is "extremely overblown for the conditions of the market."

Translator: David Silberstein