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A turning point in the debt crisis: Brazil, the US Treasury and the World Bank

Author

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  • Luiz Carlos Bresser-Pereira

Abstract

This paper is an account of the Brazilian 1987 negotiation of the debt crisis, thatrepresented a turning point in the history of this world financial crisis. When the authorassumed the Finance Ministry of Brazil, in April l997, the country was in moratorium. Theminister, after consulting international bankers, economists and state officials, prepared aproposal for solving the problem that was based in two key ideas: the securitization of thedebt with a discount, and the relative delinkage between IMF and the commercial banks inthe negotiations. In September 1997 the proposal received from the Secretary of the Treasury,James Baker, a public “non starter” answer, but given the interest it immediately arose in theinternational financial community, eighteen months later the Brady Plan, that established theparameters for solving the debt crisis, had as core proposals these two ideas. JEL Classification: N16; B31.

Suggested Citation

  • Luiz Carlos Bresser-Pereira, 1999. "A turning point in the debt crisis: Brazil, the US Treasury and the World Bank," Brazilian Journal of Political Economy, Center of Political Economy, vol. 19(2), pages 350-380.
    • Handle: RePEc:ekm:repojs:v:19:y:1999:i:2:p:350-380:id:1059
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    More about this item

    Keywords

    Public debt; external debt; stabilization policies; Bresser Plan; Brady bonds;
    All these keywords.

    JEL classification:

    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals

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