Brazil's Top Political Party Supports Debt Pact
BRASILIA -- Brazil's biggest political party has decided to support a Senate measure calling for $8.5 billion in interest payments to foreign bank creditors, a party leader said.
The support of the Brazilian Democratic Movement Party will lead to full Senate approval of the debt agreement "by Tuesday at the latest," Senator Ronan Tito predicted. "The great majority of the [party's] 25 senators will vote in favor of the debt agreement."
Advancing the Negotiations
Brazil's factionalized Senate has 81 members. Under the Constitution adopted in 1988, foreign-debt agreements need Senate approval.
If the debt payments are approved, the administration of President Fernando Collor de Mello can move on to the next step of negotiations with private and public creditors holding $122.2 billion in Brazilian debt, the senator said.
Collor's Trip to U.S.
The debt pact, reached with creditor banks in April, was approved by the Senate Economic Affairs Committee this week after being delayed last week. The postponement marred President Collor's four-day official visit to the United States, bankers said.
The Brazilian government said it will begin negotiations on an economic-adjustment program with the International Monetary Fund as soon as the Senate approves the interest payments.
Economy Minister Marcilio Marques Moreira, who is traveling with President Collor, said before leaving Brasilia that the administration would seek debt relief under the Brady plan.
The announcement marks a radical change for the Collor administration, which had shunned the Brady plan because of its economic adjustment requirements.
The plan, named for U.S. Treasury Secretary Nicholas Brady, is designed to give debt relief to Third World countries. In exchange, the countries must make economic reforms that meet with IMF and World Bank approval.
"Some of the mechanisms of the Brady plan will be sought, especially for reduction in the foreign debt," Mr. Moreira said. He declined to be more specific.