The aim of this chapter is to describe and analyse the national debate which has surrounded the problems created by Brazil's huge debt. In fact, it is a sequel of an earlier presentation made at Chatham House last April, to which some updating has been added. The speed of events, in a country such as Brazil, makes updating a necessity. Since April 1982 the external accounts situation has experienced a significant deterioration. Negotiations with private foreign banks are stalled, waiting for an IMF reappraisal of the adjustment programme of the economy and the resumption of its financing to Brazil. Payments due to the Bank for International Settlements were suspended. Time is running short and the country is on the verge of default.

Nevertheless, I have tried to present here a dispassionate report on the diversity of views and have chosen to make a rather descriptive presentation. Interaction between economics and politics is strongly suggested, while on the other hand, in view of the required synthetic character of the present chapter, the tangle of economic relationships must be kept in mind as background to the whole subject matter.

1. At the end of 1983 the foreign debt of Latin America amounted to $300 billion. Slightly less than one-third of this sum corresponds to Brazil's share – undoubtedly, the lion's share.