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banks involved in negotiating phase I of the Brazilian foreign debt
restructuring believed that Brazil's financial problems could be
resolved if Brazil were given some relatively short-term financial
assistance in overcoming its present shortage of foreign currency,
as Brazilian borrowers generally were continuing to make payments
in cruzeiros on their foreign loans. In imposing the foreign debt
repayment moratorium, the Brazilian Government and the Central Bank
were blocking remission of these loan payments because Brazil
lacked sufficient foreign currency reserves with which to
effectuate the foreign loan payments. This belief of the major
international banks proved to be erroneous, and Brazil continued to
require yet additional financial assistance from its foreign
lenders, including the later phase II and phase III of the
Brazilian foreign debt restructuring.
Officials at the highest levels of the Brazilian Government
were concerned with and kept informed of the status of the phase I,
phase II, and phase III restructuring negotiations. Of the
individuals representing the Brazilian Government and the Central
Bank during these negotiations (the Brazilians), the principal
negotiators were Finance Ministry officials and Central Bank
officials.
O. Mechanics and Negotiations of the Brazilian Foreign Debt
Restructuring
The Central Bank served as the borrower under certain
agreements entered into in connection with phase I, phase II, and
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