International competitiveness and export performance: The case of Brazil

At the end of 1982 Brazil was close to declare its international insolvency. After Mexico stopped to repay its external debt in autumn of that year the commercial banks confidence also in Brazil's creditworthiness declined rapidly. Within not quite a decade the country's external debt had increased from US-$ 12.7 billions in 1973 to US-$ 70.7 billions in 1982 while debt services which amounted to 42.3 p.c. of total export earnings in 1975 rose to 70.8 p.c. in 1982 . In December 1982 the Brazilian government had to start negotiations with the IMF and up to 1984 seven adjustment arrangements were approved - but none of them was actually met. Meanwhile Brazil has become increasingly reluctant to accept the well-known IMF-cure and tries to achieve a rescheduling of its debt through direct negotiations with the commercial banks.