Brazil Creates Panel to Renegotiate Its Debt

The office of President Jose Sarney has announced the creation of a special commission to renegotiate Brazil’s $108-billion foreign debt, the largest in the developing world.

Sarney created the commission to “give a structure to the debt problem,” presidential aide for international affairs Rubens Ricupero said Tuesday at a press conference in Brasilia.

The commission--to be headed by Finance Minister Dilson Funaro--will include representatives from the Finance Ministry, the central bank, the Foreign Ministry and the National Security Council, Ricupero said.

The commission will also include a special ambassador for foreign debt matters, who will act as an intermediary between the government and foreign creditors, Ricupero said. Career diplomat Ramiro Saraiva Guerreiro, currently Brazil’s ambassador to Rome, was named to the post. He is also a member of the Organization of American States’ Inter-American Judicial Commission.

The announcement came as Funaro and Central Bank President Fernando Gros were to begin talks with creditor banks in New York and attend a biannual meeting of the International Monetary Fund in Washington this week.

Forty-five days ago, Brazil declared a temporary suspension of payments on $70 billion of its long- and medium-term debt as the country plunged toward economic crisis. Brazil has been racked by inflation running at 13% a month and a monthly trade surplus that dropped from $1 billion to $200 million. Its currency reserves are down to $3.9 billion.

Funaro has been heavily criticized, at home and abroad, for not taking economic measures to prevent an impending crisis. The commission was seen by the Brazilian press as a way to save the finance minister from direct pressure from creditor banks and governments during the talks.