Brazil Says It Won’t Pay Interest on Debt, Calls for New Terms
Brazil, the Third World’s biggest debtor, will not resume paying interest on its $115-billion commercial debt until it has negotiated new debt payment terms, a senior government official said today.
Secretary of the Economy Antonio Kandir ruled out any payments to banks until the government of President Fernando Collor de Mello has renegotiated its debt load.
Brazil has not paid interest on its debt to banks since last July and has accumulated arrears of more than $5.5 billion.
Kandir said it was necessary to cut foreign debt payments so that Brazil can increase imports to help modernize the country.
Collor, who took office in March, has said he will limit interest payments to $5 billion a year. The last time Brazil paid all of the interest was in 1988, when it paid out $9.8 billion.
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