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From Baker to Brady: Can the new plan work?

Author

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  • Robert Devlin

Abstract

The Brady Plan proposes to stimulate reforms and development in countriesfacing problems with their external debt through debt relief and debt servicing. However,debt reduction is nothing new, as this was already an important component of the BradyPlan and its “market menu” strategy. The greatest contribution of this Plan is the willingnessto support the voluntary reduction of the external debt with public resources and publicinstitutional reform. As the Plan is conceptually correct, the difficulty is still in the lack offunds and public coordination. Without a greater commitment of public resources and astronger institutional basis for rewards and fines that can induce banks to “voluntary” losses,the Brady Plan will only produce a modest reduction in excess external debt. Furthermore,a partial reduction in excess debt produces mixed benefits for both debtors and creditors. JEL Classification: F34; F38.

Suggested Citation

  • Robert Devlin, 1990. "From Baker to Brady: Can the new plan work?," Brazilian Journal of Political Economy, Center of Political Economy, vol. 10(2), pages 224-236.
    • Handle: RePEc:ekm:repojs:v:10:y:1990:i:2:p:224-236:id:1535
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/1535/1521
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    More about this item

    Keywords

    External debt; stabilization; Brady Plan;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls

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