Brazil: Help from Abroad

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Few countries are deeper in debt than Brazil. It owes the U.S. $1.2 billion, Europe and Japan $711 million, various international lending agencies $437 million—then there's another $1 billion in short-term debts and interest. The total comes to $3.4 billion, of which $892 million falls due this year, another $354 million next year.

Last week Brazil's major creditors met in Paris to see what they could do about saving the nation from bankruptcy—and give President Castello Branco's revolutionary government a chance to work some sorely needed reforms. At U.S. urging, the economists agreed to recommend to their governments that some 40% of Brazil's debt, which normally would fall due in the next two years, be carried over until 1967 and then paid off during the next five years. As an added boost, the U.S. has also just approved a $90 million Food-for-Peace program for Brazil, along with a new $50 million loan to help brace the cruzeiro currency.

It seems like a good gamble. In the three months since Brazil's army toppled Leftist President Joao Goulart, the government has pushed through a 30,000-unit low-cost housing program, and is now steering broad agrarian, tax and banking reforms toward a vote in Congress. Businessmen are beginning to regain their confidence in the country, and the cruzeiro, which snapped back from 1,700 to the dollar just before the revolution to 1,300 on the day of Goulart's ouster, has remained steady ever since.