External Debt

Marcos Arruda

Description

Brazil owes almost $250 billion to private banks, governments and multilateral agencies. External Debt provides a concise history of Brazil’s financial crisis.



Marcos Arruda focuses on the government of Fernando Henrique Cardoso and its agreement with the International Monetary Fund. He examines how Cardoso’s economic policies have brought Brazil to financial ruin by submitting to the dictates of the IMF and the US government. Despite this, the author argues, Brazilians are neither passive nor resigned to Cardoso’s policies. Arruda describes the viable alternatives which the government and opposition parties have both failed to realise, and examines a range of related key issues, such as the Jubilee 2000 Debt Campaign and its Brazilian dimension.



Arruda explores the ways in which social movements in both hemispheres have developed a global network around the issue of over-indebtedness, and the extent to which their pressure on authorities has led to important policy changes on the part of creditor governments and multilateral institutions. The study concludes with an assessment of a range of proposals submitted by national and international forums, demonstrating that civil society around the world is mobilised towards equitable relations between North and South.
Chapter 1: E(x)ternal Debt - Understanding Brazils Debt Crisis



1. What Is External Debt?

2. Is External Debt A Motherless Child?

3. How Do You Pay External Debt?

4. Who Do You Pay External Debt To?

5. Who Pays External Debt?

6. How Did External Debt Begin?

7. We Did Not Get Into Debt, They Got Us Into Debt!

8. We Did Not Develop, We Under-Developed!

9. Capital Takes All, Social Spending Gets The Crumbs.

10. A Good Budget Makes For Good Planning.

11. The FHC-IMF Agreement: And The Government Promised Not To Govern With Packages...

12. Cancel Unpayable Debts!

13. Debt Glossary



Chapter 2: Trojan Horse – Brazil And The International Financial Crisis



1. The Reals Three-Legged Prop Starts To Fall Apart

2. Brazil And The IMF (International Misery And Famine)

3. Are There Ways Out?



Chapter 3: Neoliberal Adjustment And Globalisation - A Southern Perspective



1. The Historical Roots Of The Adjustment Project

2. The International Monetary Fund (IMF) Recipe

3. Adjusting To Competitive Globalisation

4. Economic And Social Impacts

5. Opportunities And Challenges



Chapter 4: For A Debts-Free Millennium



1. The Burden Of Unpayable And Unsustainable Debt

2. The Movements

3. Partial Successes: Official Relief

4. Alternatives, From Society's Point Of View



Bibliography



Further Reading

Sujets

• Economic Policy
• Public Policy
• International Relations
• Political Science
• Political economy

Informations

• Publié par: Pluto Press
• Date de parution: 20 mai 2000
• Nombre de lectures: 0
• EAN13: 9781849641005
• Langue: English

Extrait

External Debt

Brazil and the International Financial Crisis

Marcos Arruda

Translated by Peter Lenny

Pluto Press LONDON • STERLING, VIRGINIA in association with

andTransnational Institute(TNI)

Chapters 1–3 first published in Portuguese by Editora Vozes/PACS, Brazil. First English-language edition published 2000 by Pluto Press 345 Archway Road, London N6 5AA and 22883 Quicksilver Drive, Sterling, VA 20166–2012, USA www.plutobooks.com

Copyright © Marcos Arruda 1999, 2000

The right of Marcos Arruda to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.

British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Arruda, Marcos.  External debt : Brazil and the international financial crisis / Marcos Arruda ; translated by Peter Lenny.  p. cm. Includes bibliographical references and index. 1. Debts, External—Brazil. 2. International Monetary Fund—Brazil. 3. Brazil—Economic conditions—1945- 4. Debts, External—Developing countries. I. Title.  HJ8579 .A77 2000  336.3’435—dc21 00-008581

ISB N ISB N

0 7453 1682 4 hardback 0 7453 1681 6 paperback

Designed and produced for Pluto Press by Chase Production Services, Chadlington, OX7 3LN Typeset from disk by Marina Typesetting, Minsk, Belarus Printed in the European Union by T J International, Padstow

Dedication

Catherine and Pablo, my wife and nine-year-old son, who supported me all along, and bore with me while I rushed to meet the deadlines.

Pablo’s Grandmothers: my Mother, Lina, whose book on my time in jail as a prisoner of conscience is still looking for a publisher, and Catherine’s Mother, Mica, who has been a wonderful Grandma to Pablo.

My second Mother, Pauline McCartin, who received me as a son in her family when I was a high-school student, and to Bart and Marilyn, my brother and sister from Chicago.

About Christian Aid

Christian Aid is the official relief and development agency of 40 British and Irish Churches and works wherever the need is greatest in around 60 countries worldwide, regardless of people’s race or religion. Christian Aid links directly with the poorest communities through local organisations whose programmes aim to strengthen poor people so that they become self-sufficient. It also seeks to address the root causes of poverty and spends up to 10 per cent of its income on development education and related campaigning at home.

Contents

About the Author Abbreviations

Introduction

Chapter 1. E(x)ternal Debt: Understanding Brazil’s Debt Crisis

What is External Debt? Is External Debt a Motherless Child? How Do You Pay External Debt? Who Do You Pay External Debt To? Who Pays External Debt? How did External Debt Begin? ‘We did not Get into Debt, They Got Us into Debt!’ ‘We did not Develop, We Under-Developed!’ Capital Takes All, Social Spending Gets the Crumbs A Good Budget Makes for Good Planning The FHC-IMF Agreement: And the Government Promised not to Govern with Packages... Cancel Unpayable Debts

Chapter 2. Trojan Horse: Brazil and the International Financial Crisis

The Real’s Three-Legged Prop Starts to Fall Apart Brazil and the IMF (International Misery and Famine) Are There Ways Out?

Chapter 3. Neo-liberal Adjustment and Globalization: A Southern Perspective

The Historical Roots of the Adjustment Project The International Monetary Fund (IMF) Recipe Adjusting to Competitive Globalization Economic and Social Impacts Opportunities and Challenges

vii

x xi

1

5 5 6 7 8 8 10 11 12 16 17

20 22

30 33 38 56

61 61 62 64 66 68

viii

Contents

Chapter 4. For a Debt-Free Millennium

The Burden of Unpayable and Unsustainable Debt The Movements Partial Successes: Official Relief Alternatives, from Society’s Point of View Brazil Jubilee 2000 Campaign – Proposals being Discussed

Appendix 1: Debt Glossary

Appendix 2: Alternative Debt Policies being Discussed by Jubilee 2000 – Japan

Appendix 3: The Jubilee South Summit in Johannesburg

Bibliography and Further Reading Index

77 78 89 99 116 127

137

151 154 159 164

List of Tables

Chapter One:

1.1

1.2 1.3 1.4 1.5

1.6

External Debt of Latin American Countries at the Close of the Dictatorship Period (%) Poverty in Latin America Concentration of Income in Latin America Brazil’s External Debt in the FHC Administration Federal Government Budget – 1998 Forecast of Spending on the Federal Public Debt Most Impoverished, Heavily Indebted Countries that need the Total Cancellation of their Debts

Chapter Two:

2.1 2.2 2.3

Evolution of Interest Rates in Brazil (SELIC rate) Evolution of the Internal Public Debt Foreign Debt Service (US$ million)

Chapter Four:

4.1 4.2 4.3

4.4 4.5

4.6 4.7

Foreign Debt – Evolution, 1970–98 (US$ billion) Brazilian External Debt Service, 1993–99 (US$ million) Brazilian External Debt – Public vs. Private, 1989–98 (US$ million) Trade Balance vs. Debt Service, 1993–99 (US$ million) Brazilian External Debt as a Proportion of GDP, 1992–98 (US$ million) Owed by 41 HIPCs (US$ billion) UK Debt Relief

i x

13 14 14 16

17

24

34 35 47

78 84

85 85

85 109 110

Abbreviations

ATTAC – Action for a Tax on financial Transactions to Aid Citizens CEPAL – Comissão Econômica para a América Latina (UN) CPMF – Transient Contribution on Financial Transactions CRIES – Regional Coordination of Economic and Social Research ECLAC – Economic Commission for Latin America and the Caribbean FACS – Fundación Augusto Cesar Sandino FHC – Fernando Henrique Cardoso (president of Brazil 1994–2002) GATT – General Agreement on Tariffs and Trade GDP – Gross Domestic Product HDI – Human Development Index HFI – Human Freedom Index HIPC – Heavily Indebted Poor Countries IBRD – International Bank for Reconstruction and Development ICCAF – Inter-Church Center for Africa IDB – Inter-American Development Bank IMF – International Monetary Fund IPS – Institute for Policy Studies LTCM – Long-Term Capital Management MAI – Multilateral Agreement on Investment NGOs – Non-Governmental Organisations OECD – Organisation for Economic Co-operation and Development PACS – Alternative Policies for the Southern Cone of Latin America PFL – Liberal Front Party PMDB – Brazilian Democratic Movement Party PPB – Brazilian Progressive Party PRI – Institutional Revolutionary Party PSDB – Brazilian Social-Democratic Party SAP – Structural Adjustment Programme SES – Socioeconomy of solidarity TNCs – Transnational Corporations TNI – Transnational Institute TWN – Third World Network UN – United Nations UNCTAD – United Nations Conference on Trade and Development UNDP – United Nations Development Programme UNICEF – United Nations Children’s Fund UNRISD – United Nations Research Institute for Social Development US – United States WTO – World Trade Organisation

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Introduction

Brazil owes nearly US$230 billion to private banks, governments and multilateral agencies such as the World Bank and the Inter-American Development Bank. Today, every Brazilian child born already owes around US$1,400, which it will go on paying eternally, because this is a debt that grows the more it is paid. Alongside this looms an internal public debt of R$330 billion (R$ is the Brazilian real)(nearly US$290 billion) that drains public – that is, ‘taxpayers’ – funds to the tune of R$130 billion a year (estimates by the Central Bank for 1999) mostly just to pay interest. It is for fear of the insolvency of the government led by Fernando Henrique Cardoso (FHC) that, in wave after wave of capital flight, investors are withdrawing the money they have invested in Brazil, mostly on the stock markets. In order to avert insolvency, the FHC government opted to resort to the IMF, to accept its funds and demands in what is perhaps one of the harshest foreign loan agreements in Brazil’s history. In this way, Brazil is becoming more and more indebted in order to pay off previous debts, instead of building on its own resources and applying them to economic development and social and environmental programmes. At the same time, Brazil faces the reality of a moratorium on the social, political and environmental debts. The financial debts have become an insurmountable obstacle to these other debts ever being paid. Worse still, the creditors of the internal and external debts are rich, they have and consume far more than enough, while the creditors of the other debts are mostly oppressed, exploited and needy. And what of Mother Nature? The social debt is owed to the 100 million people immolated by colonialism and slavery over the last three centuries or more, indigenous American and African peoples and their descendants, deprived of life, work, education, health, social security, safety, the right to childhood and adolescence and so on. The political debt relates to full citizenship, from which most of

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