TCRLA_Public/040604.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

             Friday, June 4, 2004, Vol. 5, Issue 110

                            Headlines


A R G E N T I N A

AIRES PATAGONICOS: Court Authorizes Reorganization Process
ASSI S.A./HOSPITAL PRIVADO: Seek Official Reorganization
BANCO RIO: S&P Withdraws Counterparty Rating at Issuer's Request
CASA SINEBEAN: Bankruptcy Initiated Following Court Ruling
COMERCIAL ZOMA: Court Changes Informative Assembly Date

COMPANIA OMNIBUS: Reorganization Fails, Court Orders Liquidation
IN & AMP; OUT S.R.L.: Court Declares Company Bankrupt
LUMICOM: Seeks Reorganization After Debt Default
RAGHSA: Local S&P Maintains 'Speculative' Bond Rating
SORACE Y CIA: Court Order Demands Bankruptcy Process

SUSANNA CRUZ S.R.L.: Judge Approves Liquidation
TCS S.A.: Reorganization Petition Granted
YACYRETA: Higher Water Levels Sought by Winter's End


B R A Z I L

TELEMAR: Share Buyback Program Approved
VARIG: President Downplays Possible TAM Deal Probe Effects


C H I L E

ENAMI: Minister Meets Workers Over Protests
TELEFONICA CTC: Telefonica Moviles Merger Meets Setback


C O L O M B I A

METRO DE MEDELLIN: Fiber-optic Pre-bidding Attracts Eight
TRANSGAS DE OCCIDENTE: Moody's Withdraws Ratings
* Colombia Reduces Foreign Public Debt in February


D O M I N I C A N   R E P U B L I C

TRICOM: Appoints New Chairman, Board of Directors


E C U A D O R

PETROECUADOR: Government Cancels Life Policy With Coopseguros


H O N D U R A S

* Statement of the IMF Mission in Honduras


M E X I C O

AXTEL: To Spend $145M On Expansion This Year


P E R U

AERO CONTINENTE: Founder Accuses Rival of Dirty Tricks


T R I N I D A D   &   T O B A G O

CDC: Labor Minister Mediates Strike


V E N E Z U E L A

PDVSA: Calls For Calm After Fuel Shortage in Caracas
SIDOR: Officials Deny Planned Strikes


     - - - - - - - - - -

=================
A R G E N T I N A
=================

AIRES PATAGONICOS: Court Authorizes Reorganization Process
----------------------------------------------------------
Aires Patagonicos S.A. will begin reorganization following the
approval of its petition by Mar del Plata Court No. 10, reports
Infobae. The opening of the reorganization will allow the
company to negotiate a settlement with its creditors in order to
avoid a straight liquidation.

Ms. Maria Patricia Gamba will oversee the reorganization
proceedings as the court-appointed Trustee. She will verify
creditors' claims until July 5, 2004. The validated claims will
be presented in court as individual reports on August 31, 2004.

The Trustee is also required by the court to submit a general
report essentially auditing the company's accounting and
business records as well as summarizing important events
pertaining to the reorganization. This report will be presented
in court on October 19, 2004.

The Informative Assembly, the final stage of a reorganization
where the settlement proposal is presented to the company's
creditors for approval, is scheduled on March 16, 2005.

CONTACT: Aires Patagonicos S.A.
         General Paz 2539
         Mar del Plata

         Mr. Maria Patricia Gamba, Trustee
         Avenida Luro 3818
         Mar del Plata


ASSI S.A./HOSPITAL PRIVADO: Seek Official Reorganization
--------------------------------------------------------
Assi S.A. and its affiliate, Hospital Privado Modelo S.A., have
separately filed motions with the court to reorganize after the
companies defaulted on payments due on April 2, 2004 and March
2, 2001, reports Infobae.

Judge Ferrario of Buenos Aires Court No. 6, with the assistance
of Dr. Mendez Sarmiento, Clerk No. 12, is currently reviewing
the merits of the petition. Once the court approves the motion,
the companies will be able to offer a settlement proposal to its
creditors so as to avoid a straight liquidation.

CONTACT: Assi S.A.
         Tucuman 540
         Buenos Aires

         Hospital Privado Modelo S.A.
         Concordia 4315 Capital Federal
         Buenos Aires


BANCO RIO: S&P Withdraws Counterparty Rating at Issuer's Request
----------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'CCC+/Stable/C'
counterparty credit ratings on Banco Rio de la Plata S.A. at the
issuer's request.

Prior to the Argentine system's debacle beginning at the end of
2001, Banco Rio was one of Argentina's leading private banks,
surpassing the performance of most of its Argentine peers in
terms of asset quality, profitability, and capitalization. "Most
of these differentiating factors diminished in importance,
however, with the effects of the sovereign default and the
devaluation of the peso on the bank's financials," said Standard
& Poor's credit analyst Carina Lopez.


CASA SINEBEAN: Bankruptcy Initiated Following Court Ruling
----------------------------------------------------------
Judge Gutierrez Cabello of Buenos Aires Court No. 7 declared
Casa Sinebean Hogar S.A. bankrupt, says La Nacion. The ruling
approved an involuntary bankruptcy petition filed by the
Company's creditor, B.G.H. S.A., for nonpayment of US$ 12,227.22
in debt. Clerk No. 14, Dr. Giardinieri, assists the court on the
case, which will conclude with the liquidation of the Company's
assets.

The Company's trustee, Mr. Jose Planas, will examine and
authenticate creditors' claims until June 9, 2004. This is done
to determine the nature and amount of the Company's debts.
Creditors must have their claims authenticated by the trustee by
the said date in order to qualify for the payments that will be
made after the Company's assets are liquidated.

CONTACT: Casa Sinebean Hogar SA
         Alvarez Jonte 2104
         Buenos Aires

         Mr. Jose Planas, Trustee
         Paraguay 631
         Buenos Aires


COMERCIAL ZOMA: Court Changes Informative Assembly Date
-------------------------------------------------------
Buenos Aires Court No. 22, aided by Clerk No. 43, moved the
informative assembly for the Comercial Zoma S.A. reorganization
case to June 21, 2004. Creditors of the Company whose claims
have been verified by the court-appointed trustee will vote
during the assembly to ratify the settlement proposal prepared
by Comercial Zoma.


COMPANIA OMNIBUS: Reorganization Fails, Court Orders Liquidation
----------------------------------------------------------------
Compania de Omnibus Ciudad de Bahia Blanca S.A., which was
undergoing reorganization, entered bankruptcy on orders from
Bahia Blanca Court No. 3, according to Infobae.

The court assigned Mr. Mario Raul Barbiero as the Company's
trustee. The credit verification process will be done "por via
incidental", the report adds. Clerk No. 5 assists the court on
this case.

CONTACT: Compania de Omnibus Ciudad de Bahia Blanca S.A.
         Castelar 2261
         Bahia Blanca

         Mr. Mario Raul Barbiero, Trustee
         Salta 207
         Bahia Blanca


IN & AMP; OUT S.R.L.: Court Declares Company Bankrupt
-----------------------------------------------------
Judge Dieuzeide of Buenos Aires Court No. 1 declared local
company In & Amp; Out S.R.L. bankrupt, relates local daily La
Nacion. The court approved the bankruptcy petition filed by Alto
Palermo S.A, to whom the Company failed to pay debts amounting
to US$48,000.

The Company will undergo the bankruptcy process with Mr. Juan
Carlos Rico as its trustee. Creditors are required to present
their proofs of claims to the trustee for verification before
August 3, 2004. Creditors who fail to have their claims
authenticated by the said date will be disqualified from the
payments that will be made after the Company's assets are
liquidated at the end of the bankruptcy process.

Clerk No. 1, Dr. Fernandez Garello, assists the court on the
case.

CONTACT: In & Amp; Out S.R.L.
         Cerrito 466
         Buenos Aires

         Mr. Juan Carlos Rico, Trustee
         Viamonte 1546
         Buenos Aires


LUMICOM: Seeks Reorganization After Debt Default
------------------------------------------------
Lumicom S.A., a publicity company with offices in Buenos Aires,
has lodged a reorganization request under the city's Court No.
18. The motion, once endorsed by the court, will allow Lumicom
to draw a settlement plan for the approval of its creditors.

La Nacion states that the petition comes after the company
failed to update its debt payments since October 29,
2003.Documents provided by the company reveal liabilities
totaling US$ 481,278.77. Dr. Vivono, Clerk No. 36, assists the
court on this case.

CONTACT: Lumicom S.A.
         Avenida Presidente Roque S enz Pe¤a 974
         Buenos Aires


RAGHSA: Local S&P Maintains 'Speculative' Bond Rating
-----------------------------------------------------
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
maintains an 'raB' rating on US$33 million of bonds issued by
local company Raghsa S.A., says the country's securities
regulator CNV. The Company's finances as of the end of February
this year determined the rating agency's action.

The rating denotes that the bonds face exposure to adverse
business or economic conditions, which could lead to the
Company's inadequate capacity to meet its financial commitment,
said the ratings agency.

The CNV described the affected bonds as "Obligaciones
Negociables", under "Simple Issue". These come due on February
28, 2012.


SORACE Y CIA: Court Order Demands Bankruptcy Process
----------------------------------------------------
Sorace y Cia S.A., a company operating in Buenos Aires, entered
bankruptcy after Judge Gonzalez of the city's Court No. 8
ordered the liquidation of the company's assets. La Nacion
reveals that Mr. Reymundo Romero, who has claims against the
company totaling US$29,525, filed the case.

The court appointed Ms. Silvia Susana Perez Leon as the court's
trustee. Creditors must submit their proofs of claims to the Ms.
Leon for verification before August 18, 2004. The trustee is
also required to prepare the individual and general reports on
the bankruptcy process.

Dr. Lezaeta, Clerk No. 15 assists the court on this case.

CONTACT: Sorace y Cia
         General Urquiza 1508
         Buenos Aires

         Ms. Silvia Susana Perez Leon, Trustee
         Avenida Cordoba 850
         Beunos Aires


SUSANNA CRUZ S.R.L.: Judge Approves Liquidation
-----------------------------------------------
Galerias Pacifico S.A. successfully petitioned for the
liquidation of Susanna Cruz S.R.L. after Judge Gonzalez of
Buenos Aires Court No. 8 issued a bankruptcy ruling against the
troubled leather manufacturing company. La Nacion reports that
the Company's default of a US$8,795.72 obligation prompted the
bankruptcy motion.

With the bankruptcy order, control of the Company's assets will
be transferred to Mr. Ricardo Sukkiassian, the court-appointed
trustee, for eventual disposal. The trustee will be accepting
creditors' claims for verification until July 16, 2004.

CONTACT: Susanna Cruz S.R.L.
         Reconquista 890
         Buenos Aires

         Mr. Ricardo Sukkiassian, Trustee
         San Martin 1009
         Buenos Aires


TCS S.A.: Reorganization Petition Granted
-----------------------------------------
Buenos Aires-based T.C.S. S.A., a company engaged in the
production and sale of ticketing machines, begins reorganization
after Judge Gutierrez Cabello of the city's Court No. 7, with
assistance from Dr. O'Reilly, Clerk No. 13, granted its petition
for "concurso preventivo".

During the reorganization, the company will be able to negotiate
a settlement proposal for its creditors so as to avoid a
straight liquidation.  According to Argentine news source La
Nacion, the reorganization will be conducted under the direction
of Mr. Jorge Stanislavsky , the court-appointed trustee.

Creditors with claims against T.C.S. must present proofs of the
company's indebtedness to the trustee before August 13, 2004.
Unverified creditors will not be able to participate in the
informative assembly where the settlement proposal will be
presented for ratification.

CONTACT: T.C.S. S.A.
         Avenida Julio A. Roca 751
         Buenos Aires

         Mr. Jorge Stanislavsky, Trustee
         Talcahuano 768
         Buenos Aires


YACYRETA: Higher Water Levels Sought by Winter's End
-----------------------------------------------------
Argentina seeks to raise water levels at the Yacyreta hydropower
dam from 76 meters to 77 meters at the end of the Southern
Hemisphere winter, Dow Jones Newswires reports, citing
officials. In order to achieve this goal, Argentina must
complete the projects needed to lift water levels by a meter in
a few months, when Argentina's winter ends, said Alfredo
Scoccimarro, a spokesman for Argentina's Planning Ministry.

Works include the development of sanitation services in the
Paraguayan city of Encarnacion and works on the Costanera side
of the dam, which sits on the Argentine-Paraguayan border.

However, recent media reports suggest that Paraguay may not
consent to increase water levels in the short-run. Last week,
Paraguay officials had to deal with widespread protests seeking
to block any moves that could create problems for the local
population.



===========
B R A Z I L
===========

TELEMAR: Share Buyback Program Approved
---------------------------------------
TELE NORTE LESTE PARTICIPACOES S.A. (NYSE: TNE) announced
Wednesday that its Board of Directors authorized management to
resume the Share Buyback Program for up to 10% of the combined
free float of the Company's preferred shares and common shares.
The decision to authorize resumption of the buyback program took
into account the actual conditions of the Brazilian economy, the
current depressed prices of the Company's shares in the market
and the recommended practice of returning cash to the Company's
shareholders.

According to CVM regulations (Instruction 10/80), the Company
has a free float of 59,031 million common shares -including
1,844 million of treasury shares- and 255,687 million preferred
shares. The program allows the Company to repurchase a maximum
of 4,059 million common and 25,569 million preferred shares,
corresponding to 10% of the Company's total free float, and
excluding the shares held in treasury. The buyback will be
funded from retained earnings, which had a balance of R$4,234.7
million as of March 31, 2004.

In addition, the Board of Directors of Telemar Norte Leste
(BOVESPA:TMAR), approved on the same date a similar repurchase
program. The shares involved in the buyback program amount to a
maximum of 295.9 million common shares, and a maximum of 3,946.3
million preferred shares class "A" (TMAR 5) and 143.3 million
preferred shares class "B" (TMAR 6). The buyback will be funded
from retained earnings, which had a balance of R$1,260.5 million
as of March 31, 2004.

Both buyback programs are authorized for a period of up to one
year, effective June 3, 2004.

CONTACT:  TNE - INVESTOR RELATIONS
          Email: invest@telemar.com.br
          Roberto Terziani - 55 (21) 3131-1208
          Carlos Lacerda - 55 (21) 3131-1314
          Fax: 55 (21) 3131-1155

          GLOBAL CONSULTING GROUP
          Kevin Kirkeby
          E-mail: kkirkeby@hfgcg.com
          Tel: 1-646-284-9416
          Fax: 1-646-284-9494


VARIG: President Downplays Possible TAM Deal Probe Effects
----------------------------------------------------------
A top executive of Brazil's second-largest airline Varig SA
asserted Wednesday that the airline's code-sharing agreement
with TAM SA is necessary for Varig's survival, reports Dow Jones
Newswires. Varig president, Carlos Luiz Martins, made the
assertion in order to fight recommendations that the airlines'
code-sharing program be "forbidden" because it allowed the
airlines to form a cartel.

Earlier, Seae, a branch of the Finance Ministry that looks into
issues on competition, recommended that the code-sharing program
should be "forbidden" for anti-competitive reasons. Seae's
report has since prompted Brazil's Ministry of Justice to launch
its own investigation into the code-sharing program.

Despite the investigation, Mr. Martins is confident that the
code-sharing program will remain in place as it has the approval
of top regulator Cade.

The Brazilian regulator approved the code-sharing last year as
an initial step towards a merger between TAM and debt-saddled
Varig, which was feared to go bankrupt.

CONTACT:      VARIG (Viacao Aerea Rio-Grandense, S.A.)
              Rua 18 de Novembro No. 800, Sao Joao
              90240-040 Porto Alegre,
              Rio Grande do Sul, Brazil
              Phone: (51) 358-7039/7040
                     (51) 358-7010/7042
              Fax: +55-51-358-7001
              Home Page: www.varig.com.br/english/
              Contacts:
              Dorival Ramos Schultz, EVP Finance and CFO
              E-mail: dorival.schultz@varig.com.br

              Investor Relations:
              Av. Almirante Silvio de Noronha,
              n  365-Bloco "B" - s/458 / Centro
              Rio de Janeiro, Brazil

              TAM
              Daniel Mandelli Martin, President
              Buenos Aires
              Tel. (54) (11) 4816-0001
              URL: www.tam.com.br



=========
C H I L E
=========

ENAMI: Minister Meets Workers Over Protests
-------------------------------------------
Mine workers and trade union officers had a chance to voice
their objections against the transfer of Ventanas copper
smelting plant from Enami, the Chilean state-run mining company,
to Codelco, the state-owned copper producer, when Mr. Alfonso
Dulante, the country's Mines Minister met with them on June 3,
2004.

El Diario reports that the Chilean government proposed the
ownership transfer last week in order to cut Enami's US$500
million debt, which had began to cripple the company's finances.
Local workers in Copiapo, however, met the move with protests.


TELEFONICA CTC: Telefonica Moviles Merger Meets Setback
-------------------------------------------------------
Entel PCS and Telmex Chile, key players in Chile's cellular
telecommunications market, have aired their opposition to
Telefonica Moviles' planned purchase of troubled cellular
company Telefonica CTC.

According to El Diario, Telmex Chile, a subsidiary of the
Mexican telecommunications group, has filed a lawsuit with the
Chilean anti-trust and competition court against Telefonica CTC,
Telefonica Moviles and Bellsouth in an attempt to stop the
merger, which they say will further crowd the radio-electric
spectrum in the 800 Mhz band.



===============
C O L O M B I A
===============

METRO DE MEDELLIN: Fiber-optic Pre-bidding Attracts Eight
---------------------------------------------------------
Colombian mass transit company Metro de Medellin's pre-bidding
for a 10-year concession to operate 65% of its fiber-optic
network attracted eight bidders. These companies, according to
Business News Americas, include Corfinsura, Empresa de Telefonos
de Bogota (ETB), Impsat, Internexa, Inverlink, Telmex, Diveo and
Orbitel.

Earlier, Maria Restrepo, director of planning at Metro de
Medellin, said that bidding rules will be issued early this
month ahead of the actual bidding process in the middle of the
month.

Pre-bidding was required under Colombian concession law and pre-
bidding documents must be made available for comment before the
final bidding rules are issued.

Winning bidders are required to pay an up-front fee at the
beginning of the concession and a monthly fee of COP50 million a
month, which may change in the final bidding rules.


TRANSGAS DE OCCIDENTE: Moody's Withdraws Ratings
------------------------------------------------
Moody's Investors Service withdrew the debt ratings of TransGas
de Occidente S.A. due to lack of adequate information to
maintain a rating.

Affected ratings are as follows:

TransGas de Occidente S.A. -- Ba2 first mortgage bonds.

Headquartered in Bogota, Colombia, TransGas de Occidente S.A. is
a natural gas transmission company.


* Colombia Reduces Foreign Public Debt in February
--------------------------------------------------
Colombia's Central Bank revealed Wednesday that the government's
foreign public debt fell to US$24.6 billion in February from
US$24.8 billion in January, relates Reuters. However, February's
figure is still 5.0% higher than the US$23.5 billion in February
a year ago.

The proportion of debt to gross domestic product fell sharply to
42.1% in February from 49.2% in the same month last year.
Colombia's GDP grew by 3.8% last year and increased more quickly
in dollar terms due to a revaluation of the peso.



===================================
D O M I N I C A N   R E P U B L I C
===================================

TRICOM: Appoints New Chairman, Board of Directors
-------------------------------------------------
Tricom, S.A. (OTC Bulletin Board: TRICY) announced Tuesday that
Ricardo Valdez Albizu has been named chairman of the company's
board of directors. Mr. Valdez Albizu has been a non-executive
member of the company's board of directors since February 2004.
Carl Carlson, who resigned his position as director, had been
the acting chairman since December 2003. Mr. Carlson, who had
been a member of the board of directors since 2000, will
continue to serve as president and CEO overseeing the company's
day-to-day operations. The company also announced the
appointments of James Deane, Roberto Saladin, Arturo Pellerano
and Adriano Tejada to its board of directors.

James Deane, 61, earned his bachelor's degree in industrial
engineering from Stanford University and has a master's degree
in business administration from the Wharton School of Business,
University of Pennsylvania. Mr. Deane is the Chief Executive
Officer and majority shareholder of DSJ Holdings, Inc., a Miami
based Florida corporation specializing in the origination of
structured trade transactions and procurement for overseas
buyers in Latin America and Africa. Mr. Deane is a former 21-
year Citibank executive where he served in key positions in
Latin America and the U.S., including assignments as Country
Corporate Officer in Ecuador and the Dominican Republic.

Roberto Saladin, 67, is a highly respected Dominican businessman
who has held numerous governmental and diplomatic positions,
including Dominican Ambassador to the United States, General
Manager of the state-owned Banco de Reservas, the country's
largest commercial bank, and Advisor to the United Nations
Development Programme (UNDP), among others. Mr. Saladin holds a
law degree from Universidad Autonoma de Santo Domingo.

Arturo Pellerano, 50, is the founder and former chairman,
president and chief executive officer of Tricom, S.A. Mr.
Pellerano, holds a bachelor's degree in Economics from
Universidad Pedro Henriquez Urena.

Adriano Tejada, 56, holds a law degree from Universidad Catolica
Madre y Maestra, and a master of arts in political science from
Temple University, Philadelphia. Mr. Tejada is also a Fulbright
scholar with studies in journalism and political history from
the University of Pittsburgh. Mr. Tejada is a former associate
professor and dean at Pontificia Universidad Catolica Madre y
Maestra and has been the editor of several prominent newspaper
publications in the Dominican Republic. Mr. Tejada served as
press secretary for President Leonel Fernandez from 1997 to
2000.

The four new appointments brings the number of directors on the
Company's board of directors to ten, consisting of the following
individuals: Ricardo Valdez Albizu, Hector Castro Noboa, Edwin
Corrie, Anibal de Castro, James Deane, Marino Ginebra, Arturo
Pellerano, Roberto Saladin, Adriano Tejada and Valeriano
Valerio.

About TRICOM

Tricom, S.A. is a full service communications services provider
in the Dominican Republic. The Company offer local, long
distance, mobile, cable television and broadband data
transmission and Internet services. Through Tricom USA, the
Company is one of the few Latin American based long distance
carriers that is licensed by the U.S. Federal Communications
Commission to own and operate switching facilities in the United
States. Through its subsidiary, TCN Dominicana, S.A., the
Company is the largest cable television operator in the
Dominican Republic based on its number of subscribers and homes
passed.

URL: http://www.tricom.net
Investor Relations Website: http://www.tdr-investor.com



=============
E C U A D O R
=============

PETROECUADOR: Government Cancels Life Policy With Coopseguros
-------------------------------------------------------------
The Ecuadorian government nullified the life policy that state
oil company Petroecuador had with local insurer Coopseguros,
reports Business News Americas. The cancellation of the
US$595,000 contract [due to expire January 2005] came five
months after it was awarded to Coopseguros. When asked why the
policy was called into question after so much time had lapsed, a
Coopseguros source said that this was simply the way that
Ecuadorian institutions operated.

Under the new legislation, any public contract that exceeded
US$224,000 must have approval from the government.

According to the source, the insurer and Petroecuador are
holding negotiations for the latter to reimburse the death and
accident policies already paid out by Coopseguros to
Petroecuador employees.

In the meantime, the state oil company's insurance unit is
seeking authorization from its board to begin a new bidding
process. Coopseguros plans to participate in the process once
again but will stick with its original proposal that is now
void.



===============
H O N D U R A S
===============

* Statement of the IMF Mission in Honduras
------------------------------------------
The following statement was released in Tegucigalpa on May 28,
2004, by an International Monetary Fund (IMF) mission:

"A technical mission from the IMF visited Honduras during the
last twelve days, with the aim of initiating the consultation
that the Fund carries out every year with its member countries.
The mission met with officials from the government and national
congress, representatives of the private sector, international
community, the Catholic church, and civil society, in order to
identify and analyze recent economic developments.

"The mission did not come to evaluate performance under the
government's economic program, which is being supported by the
IMF. It would have been very premature to do so, since the first
quantitative targets will be assessed with data for end-June.
However, we analyzed the evolution of the economy during the
first quarter of the year and compared it with indicative
targets under the program--and we would like to share our main
findings with you.

Growth and prices

"The mission found with satisfaction that the outlook for
economic growth this year is favorable. Nonetheless, the
behavior of inflation in April was less reassuring, because
prices rose more than had been expected, principally as a result
of the impact of the rise in fuel prices and its effect on
transport costs.

"Unfortunately, the rise in international fuel prices is
affecting all oil-importing countries and Honduras is no
exception.. Since this is a worldwide problem, it is not
surprising that neither the government or the commission has
been able to resolve it. Other countries have been able to do no
better, In our view, the authorities have taken all possible
actions to reduce costs. It should be recognized that although
the government could not reduce the fuel tax without having to
cut spending on social programs, it did rapidly shift to a tax
fixed by the gallon, which ensured that government revenue would
not rise in tandem with price increases. Despite this, we note
with concern that expensive fuel is affecting the purchasing
power of Hondurans and we hope that international prices of
petrol will return to more reasonable levels in the near future.

Monetary policy

"The international reserves and net domestic assets of the
central bank reached much more favorable levels than expected,
as a result of improvements in prices of export products and
higher foreign exchange inflows. That is, in the face of high
and growing petroleum prices, the monetary policy of the central
bank has been prudent, in order to safeguard the end-year
inflation target.

Fiscal Policy

"The mission found with satisfaction that fiscal revenue has
grown compared to the same period of last year and thus
contributed to meeting the indicative target for the fiscal
deficit. While central government salaries also performed as
intended, the government had some difficulty in controlling
transfers. Thus, it is imperative that fiscal policy continue to
be managed with much caution from now on, to ensure that, for
the rest of the period, the deficit does not exceed its
programmed level.

"It is understandable that the public feels hit by repeated
increases in fuel prices. Nonetheless, the protests of some
groups are a cause for concern, particularly because they appear
to be focused on pressuring for the reversal of the salary
policy adopted by the government at the end of last year. In our
view, this would be tantamount to reconcentrating scarce
resources in specific groups, would weaken fiscal policy, and
would hinder progress with the poverty reduction strategy. Thus,
it is important to sustain the efforts of dialogue and
consultation with social fora that have already been
established.

Financial sector

"Some legal reforms of the financial system have already gone to
congress and others will be sent in the next few days. We
understand that there are good prospects for their approval.

This is very encouraging since these legal instruments are the
foundation for the government's action plan to strengthen
financial institutions and improve their efficiency.

Strategy for poverty reduction

"The government has made great efforts to dedicate more
resources to programs in the fight against poverty. The
challenge from now on is to ensure that both budgetary funds and
the growing resources that the country is receiving from the
international community translate into an effective and visible
reduction in poverty. Besides the successful Paris Club debt
restructuring which took place in April, the country now has the
opportunity to mobilize further resources to fight poverty,
given the Consultative Group meeting at the beginning of June in
the presence of the international community and multilateral
organizations.

"The maintenance of solid economic policies, the emphasis on
transparency and good governance, and the collaboration of all
sectors will permit the economy to grow and reach the completion
point under the HIPC initiative."

CONTACT: IMF EXTERNAL RELATIONS DEPARTMENT
         Public Affairs
         Tel: +1 202 623 7300
         Fax: +1 202 623 6278

         IMF EXTERNAL RELATIONS DEPARTMENT
         Media Relations
         Tel: +1 202 623 7100
         Fax: +1 202 623 6772



===========
M E X I C O
===========

AXTEL: To Spend $145M On Expansion This Year
--------------------------------------------
Axtel S.A. de C.V., a privately held Mexican competitive local
exchange carrier, will invest US$145 million this year to expand
its reach into six new mid-sized cities, reports Reuters.
Originally, the Company planned to invest only US$90 million
this year, but strong first quarter performance prompted it to
increase the figure.

Company managers said the investments will mainly be in
infrastructure, to build on existing networks and expand into
new cities in central and northwestern Mexico. The first two of
the six new target cities are Queretaro and San Luis Potosi,
where operations should begin in July, while Aguascalientes,
Ciudad Juarez, Saltillo, and Tijuana should begin to receive
services by the end of the year.

"We plan to use better technology and better services to make a
more attractive offering for our customers," Axtel northwest
manager Samuel Lee said. "It is the same formula we use in our
current cities."

"Axtel currently has 370,000 phone lines and has seen 22%
revenue growth over a 12 month period. We plan to continue to
enhance that," Axtel Central Mexico executive manager Andres
Vel zquez said.

Axtel will also be expanding its network in the cities of
Guadalajara, Leon, Mexico City, Monterrey, Puebla and Toluca,
where it already offers local, national and international long
distance, data and internet services.

Axtel counts the Soros Group and AIG-GE Capital Latin American
Infrastructure Fund among its foreign investors.



=======
P E R U
=======

AERO CONTINENTE: Founder Accuses Rival of Dirty Tricks
------------------------------------------------------
Mr. Fernando Zevallos, founder of Peruvian airline Aero
Continente, has accused the Chilean government and rival
LanChile of devising a plot to destroy his airline company by
linking him to Peru's biggest drug gangs that has led to his
inclusion on a list of foreign drug-lords released by the U.S.

In a news conference in Lima last Wednesday, Mr. Zevallos
harshly condemned his inclusion on the list, which has resulted
in sanctions that effectively cuts off Aero Continente's access
to trade and finance in the U.S. His inclusion on the Foreign
Narcotics Kingpin Determination act also blocks his U.S. assets,
valued at close to US$1 million, and those of Aero Continente.

Reuters reports that the American government has established
links between Mr. Zevallos and the late Colombian drug lord
Pablo Escobar. Investigations into his activities began after
Peru's biggest cocaine bust in 1995. Peru is the world's No. 2
cocaine producer, after Colombia.



=================================
T R I N I D A D   &   T O B A G O
=================================

CDC: Labor Minister Mediates Strike
-----------------------------------
Strikes aimed at securing wage increases and improved health
plans for Caribbean Development Co. workers continues as Labor
Minister Mr. Anthony Roberts seek to work-out a deal between the
opposing camps.

Negotiators from the National Union of Government and Federated
Workers (NUGFW) met with ministry representatives, led by Selby
Brathwaite and Harry Sooknanan, on Tuesday to discuss the
union's demands.

Meanwhile, the Trinidad Guardian reports that CDC officials are
due to meet with the labor minister this week.



=================
V E N E Z U E L A
=================

PDVSA: Calls For Calm After Fuel Shortage in Caracas
----------------------------------------------------
Venezuela's state oil company PDVSA tried to alleviate fears
caused by a delay in fuel shipments from its Guatire plant on
Monday to some 25 service stations in Caracas, reports Business
News Americas.

In a statement, PDVSA president Ali Rodriguez said: "The supply
of fuel is completely guaranteed in the whole country."

"We are on course to resolving some small problems we had in
some service stations in the capital city," he continued.

There was a shortage of fuel in Caracas on Monday due to "small"
problems at PDVSA's two distribution plants.

But Mr. Rodriguez guaranteed that "the Carenero and Guatire
plants which supply the capital have enough inventory, so
everyone can be calm and avoid panic buying."


SIDOR: Officials Deny Planned Strikes
---------------------------------------
Local press reports of an impending 24-hour strike planned by
truck drivers servicing Sidor have been refuted by company
officials. Business News Americas quotes an officer of the
Venezuelan iron and steel company as saying that " Shipments
were never halted and we continue as normal attending the
[domestic] market."

The official added that the issue of the truck drivers is
between them and the transport contractor since the truckers are
not employees of Sidor.

Sidor, in Puerto Ordaz in eastern Venezuela's Bol¡var state, is
60% owned by the Amazonia consortium. Amazonia is made up of
Mexican companies Hylsamex (Alfa group) and Tamsa (Techint
group), Argentine company Siderar (Techint group), Brazil's
Usiminas and Venezuela's Sivensa. The Venezuelan government
controls the remaining 40% stake in the company.



                            ***********


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
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Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and
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Copyright 2004.  All rights reserved.  ISSN 1529-2746.

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