Brazil Won’t Pay ’88 Interest Unless It Gets New Loans

Finance Minister Mailson da Nobrega today said Brazil would not start paying 1988 interest on its huge foreign debt unless creditor banks abroad advanced it new loans.

Brazil owes foreign creditors $112.7 billion, the biggest debt among developing nations. Last year it halted interest payments on about $67 billion of that debt for more than 10 months but recently began making payments on the arrears under a $3-billion short-term package negotiated with its creditor banks.

Creditor banks now negotiating with Brazil in the United States had expected Brazil routinely to go ahead with 1988 interest payments, but this has not been the case. In fact, Brazil has maintained it did not believe it had to make 1988 payments until it reached a longer-term agreement with its hundreds of creditor banks internationally.

Brazil has not paid back any of its principal since late 1982.