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Editor's Note:
We are working with format of the daily news. We welcome your suggestions - constructive if possible - to make this the 'best' daily news source in Costa Rica!

Send your comments to:
editor@insidecostarica.com


Tuesday 14 January 2003 


Costa Rica also to issue debt in dollars!

With major Latin American bond markets looking volatile in 2003 and markets hungry for higher yields, debt from the small nations of Central America could catch the eye of investors.

Costa Rica, Panama, El Salvador and Guatemala, whose small economies are dominated by coffee, bananas, sugar and tourism, plan to issue dollar-denominated sovereign debt on international markets this year, with Costa Rica and Guatemala leading off this month.

Costa Rica's Finance Ministry said it will launch a $450 million bond offer in January, led by Deutsche Bank, but declined to give an issue date.

Guatemala, the biggest economy in Central America with gross domestic product of $45 billion in 2001, said it aims to sell $500 million in new paper on Jan. 20, although it has yet to set to the terms of the offer.

Panama hopes to issue around $250 million later this year, according to Deputy Finance Ministry Domingo Latorraca, while El Salvador's Finance Ministry has set either June or July as the date for its bond sale.

Analysts put the El Salvador offer at some $300 million. There will be takers for debt, analysts say, despite rising fiscal deficits in the four countries, as investors look for higher yields and assume more risk. Yields are around 7 percent to 9 percent on Central American bonds, seen as medium risk, compared with 3 percent to 4 percent on dependable U.S Treasuries.

A five-week-old general strike has brought Venezuela's economy to a halt, while Argentina appears hard pressed to prepare for elections in April amid economic malaise.

Uncertainty in Brazil over the direction of the new government makes the relative stability of Central America look attractive. This for a region that in the 1980s was known more for its civil wars and death squads than its credit ratings.

Mexico debt, however, remains in high demand. On Thursday Mexico milked market optimism, doubling a planned sovereign bond sale to $2 billion.

According to Rafael Barraza, former president of El Salvador's Central Bank, Central America should benefit from the pick-up of the U.S economy in 2003.

"Negotiations for a free trade pact between Central America and the U.S. will also give investors confidence," Barraza said. The United States and five Central American nations, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, launched free trade talks on Wednesday.

In April, El Salvador sold $500 million in 30-year international bonds, the first Central American country to issue a 30-year bond. El Salvador again went to market in July, issuing $300 million in nine-year bonds. El Salvador is one of Latin America's few investment grade issuers. Fitch and Moody's both rate it investment grade, but not Standard & Poor's, which rates it BB, giving the same rating to Costa Rica, Guatemala and Panama.

The popularity of Central American debt may not last beyond 2003, however. Still seen as an exotic credit popular for its scarcity value, continued issues of the region's debt could damage that image and snap off demand, analysts say.

Panama recently disappointed investors with a weak tax reform, bringing in only half of the $120 million initially projected. Guatemala is struggling with the three-year-old collapse in world coffee prices, dealing a severe blow to its export base.

Costa Rica is currently running a budget deficit of 4.4 percent of gross domestic product, while El Salvador has a fiscal gap of 3.3 percent.


A Bridge too far...?
From our local correspondent.

Many bridges that are part of the Pan -American Highway are becoming more dangerous as they age and much needed maintenance is often not performed.

More damage is being caused by natural erosion, a result of the torrential rains and other seasonal shifts. Especially in the southern zone, bridge structures have deteriorated to a point were safe crossing is almost impossible.

Some work was started last December but for some crossings it may be too late. With high levels of the rivers during the rainy months and the continued use of these structures by heavy vehicles, the damaging effects are outpacing the repair work.

Even new bridge construction is far from ideal. It is the major hold-up regarding the highway construction between San Jose and Jaco. And on existing roads, like the one leading from Jaco, through Parrita to Quepos, new bridges are being built but at a snail's pace.

All over Costa Rica, bridges are becoming unstable and at times even collapse. About eighteen months ago, the bridge outside of Santa Eulalia, near Atenas collapsed and a crossing truck fell 14 meters into the river below. Fortunately, the driver escaped with minor injuries. But like many other bridges here, this one was built by the US Army Corps of Engineers and had served far beyond the intended period for which it was constructed.


Free Trade Agreement warrants conditions

President Abel Pacheco, in his weekly radio address yesterday, said that he will not allow his country to be put at a disadvantage as a result of negotiations concerning the Free Trade Agreement. the Minister of Foreign Trade, Alberto Trejos, was present at the official kick-off for these talks in Washington, DC last Wednesday. Trejos said that he made it very clear that the rules of the talks should be explained fully and that they should be fair to all parties involved. No country should be placed at a disadvantage because its level of trade activity is less than that of a competing nation.

Other countries involved and affected by this pact have voiced similar concerns.

An other item of discussion is the eradication of corruption, as to where this would not have an effect on the outcome of the Trade Agreement. Many nations are demanding that countries with such a reputation, or having known official and political persons that have been accused of corruption, must eradicate this problem sufficiently or risk being banned from the Treaty.

The outcome of these talks and the resulting agreement will impact Costa Rica and all of Latin America. Proponents of the Free Trade Agreement predict an increase in imports and exports, and a resulting boost in the economy of participating nations.



INTERNATIONAL NEWS                             


Bee Gee dead in Miami

The Bee Gees: Barry, Robin and Maurice Gibb


On Sunday morning, at Mount Sinai Hospital in Miami, Maurice Gibb, member of the popular British Group "The Bee Gees" passed away during surgery.
A hospital spokesperson said that Maurice Gibb was undergoing surgery to correct a serious intestinal obstruction, but suffered a heart infarct from which he did not recover.
 
Mr. Gibb was born on the island of Man, Great Britain. Together with his brothers Barry and Robin, they formed the band that has made a lasting impression on the music world.
The "Brother's Gibb", later abbreviated to "Bee Gees", rivaled bands like The Beatles and The Rolling Stones in popularity. With its distinct "Surfer Sound", it had its own huge following as well.
 
Maurice was preceded in death by a younger brother; Andy, who succumbed more than two decades as a result of alcohol and drug abuse.
Maurice himself suffered many health problems because of a lifetime of heavy alcohol use.
 
He leaves behind a wife and two children. He was 53 years old.



NO Solution near in Venezuelan Oil Crisis 

Street clashes intensified as a result of tensions due to a six week old strike against Venezuela's President Hugo Chavez, and a solution to the political deadlock over his rule seemed no closer on Monday.Police fired tear gas and a water cannon to disperse hundreds of Chavez supporters protesting against the strike in western state of Zulia. National Guard troops also repelled government sympathizers who attacked an opposition delegation with stones in Caracas
.
The clashes were the latest outbreak of violence in an escalating opposition strike aimed at forcing populist Chavez to resign. The shutdown has slashed Venezuela's vital oil exports, causing widespread domestic fuel and food shortages and jolting world energy markets.

Oil prices rose 58 cents to $32.26 a barrel on Monday despite a pledge from the OPEC oil exporters cartel to increase output to compensate for the Venezuelan crisis. But 43 days into the stoppage the government and opposition appeared no nearer to making a deal on elections that might restore stability to South America's largest oil producer.

International pressure is increasing for a solution to the conflict in Venezuela, which usually provides about 13 percent of U.S. oil imports. The crunch in Venezuela's petroleum supply comes as Washington prepares for a possible attack on Iraq.

Opposition leaders on Monday gave a lukewarm response to a fledgling initiative, first broached by Brazil, for a "group of friends" from regional nations to help broker an accord. Talks chaired by the Organization of American States have so far failed to reach an agreement on elections.

Chavez administration officials have welcomed the idea.

"We might agree to a group of friends, not of Chavez, not of the government, but of Venezuela, which are two different things. This initiative must be in tune with OAS negotiations," anti-Chavez union boss Manuel Cova told Reuters.

But other opposition leaders in Caracas questioned the initiative and said it could confuse negotiations.


Joe Lieberman says he is going to run to win!

Democratic Sen. Joseph Lieberman declared on Monday he will run for the U.S. presidency, which could make him the first Jewish president in the nation's history.

Lieberman, 60, who already made history in 2000 as the first Jew drafted as a vice presidential candidate when he shared the losing Democratic ticket with Vice President Al Gore, told a small audience at his alma mater, Stamford High School, that he was running to "make the American Dream real again."

Freed by Gore's decision not to make another bid for the White House, Lieberman told the crowd of well-wishers, "I am ready to announce today I am running for president in 2004."

"In the coming months, I want to convince Americans that I have the strength, the vision and the values to lead our nation to higher and safer ground," he added. "The American Dream is in jeopardy," he said, "threatened by hateful terrorists and tyrants from abroad and a weak economy that makes it harder for Americans to live a better life."

A devout Orthodox Jew, Lieberman routinely did not campaign on the Sabbath during the 2000 race. A spokesman in his Washington campaign office said Lieberman intended to continue to observe the laws of his religion during this campaign.

Asked in Stamford how he thought the American people would respond to his religion, Lieberman said he would not hesitate to talk about faith, and he cited the Declaration of Independence and its protection of rights and liberties endowed by "the Creator."

Comparing the coming campaign with the race he ran with Gore, Lieberman said similar issues such as economic reform, the environment and educational reform would arise but added, "This gives me an opportunity to do it my way."

The two Democrats won the popular vote but lost the electoral vote in their race against Republicans George Bush and Dick Cheney. Lieberman said he had asked for Gore's support, but did not expect the former vice president to endorse anyone this early in the campaign. "I would be honored by his support, but I've got to earn it," he said.

Wasting no time taking aim at the Bush administration, he said: "This president, I'm afraid, made a promise to come to Washington to change the tone, and the reality is the place is more partisan and polarized than ever.

"The country doesn't benefit from the poor economic record, from the failure to fund education reform, the inability to improve our health care system and from the slowness with which the president has responded to the threat to Americans here at home from terrorism."

A centrist Democrat, Lieberman has previously clashed with Bush over probes into the bankrupt Enron Corp. and Bush's designs for the Department of Homeland Security.

He first came to national prominence in September 1998 when he was the first Democratic senator to denounce President Bill Clinton's affair with White House intern Monica Lewinsky as morally wrong.




Vatican voices opposition to Iraqi War


Pope John Paul II led a growing chorus of voices raised against war or opposed to any hasty decision to pull the trigger, saying a conflict in the Gulf would be a "defeat for humanity." Saudi Arabia, Turkey and others talked of peace initiatives.

The big question was whether the U.N. experts and nervous governments in Europe and the Middle East had made Washington more cautious about carrying out a threat of war against Iraq if it failed to come clean over any weapons of mass destruction.

U.S. officials and defense experts said political and logistical pressure could delay any invasion of Iraq for months, despite the Pentagon's huge build-up of warplanes, ships and tens of thousands of troops in the oil-rich Gulf region.

"Those soldiers can't just hit the sand shooting on arrival. I wouldn't expect anything in February, or even early March. And who knows what the political landscape will be then?" one U.S. official told Reuters.
But the United States and close ally Britain face a dilemma in war planning as April heralds the start of Iraq's fierce summer heat and sandstorms.

The pope became the most prominent new voice against conflict in the Gulf, declaring in an address: "No to war!"
The U.S. military said Western warplanes bombed an anti-ship missile launcher in south Iraq Monday, deeming it a threat to its vessels in the Gulf, and dropped hundreds of thousands of leaflets urging Iraqis to listen to U.S. radio broadcasts.
As U.N. inspectors took their hunt to Iraq's science and technology colleges, the ruling Baath Party newspaper al-Thawra said Baghdad was ready for war.

"Iraqis ... know how to fight the aggressors," the paper said.




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