Part of Brazil’s Foreign Debt to Be Rescheduled

The Paris Club of Western creditor nations agreed Saturday to reschedule part of Brazil’s huge foreign debt.

An announcement said the agreement will be applied to payments involving nearly $5 billion in debts with the payments having been scheduled between Jan. 1, 1987, and March 31, 1990. The $5 billion is a third of Brazil’s public debt of $15 billion.

Overall, Brazil is the most indebted nation in the developing world, owing $121.5 billion to foreign creditors. An estimated 25% of that total is owed to the United States.

A statement from the Paris Club said the agreement on the $5 billion portion rescheduled the payment over 10 years, including a five-year grace period.

“Brazil will pay neither a cent of interest nor principal until March 31, 1990, on the rescheduled debt,” said Sergio Amaral, secretary for international affairs at Brazil’s Ministry of Finance.

The arrangement was reached after a two-day meeting here between representatives of Brazil and its 13 public creditors.

Observers here noted that it is unusual for rescheduling arrangements by the club of Western creditor nations to include interest as well as principal.

Welcomed Recovery Efforts

The Paris Club statement said the creditor countries “welcomed the efforts at economic recovery” undertaken by the Brazilian government and wanted to “make a positive contribution to the improvement of this country’s external payments prospects in order to facilitate the recovery of its economy.”

The 13 creditor countries involved in the Paris Club agreement are Austria, Belgium, Canada, France, West Germany, Italy, Japan, the Netherlands, Spain, Sweden, Switzerland, Britain and the United States.