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companies during a specified relending period; 1986 debt payments,
on the other hand, would not be available for relending.
The phase I DFA and the phase II DFA did not cover foreign
debt payments that were due after January 1, 1985. During the
phase III negotiations, Brazil and its foreign lenders agreed to
six interim loan arrangements under which debt payments due from
Brazilian borrowers after January 1, 1985, would be held by the
Central Bank as “interim deposits”. These interim arrangements
required the Central Bank to pay the foreign lenders interest on
the interim deposits on a “net quoted” basis (which is discussed
infra). The interim arrangements did not provide for any relending
period, as the Brazilians and the foreign lenders envisioned that
these interim deposits would be rolled over into and covered under
the phase III DFA.
The phase I DFA, phase I CGA, phase II DFA, phase II CGA, and
phase III DFA loans were foreign currency loans. Each loan was
made, and was to be repaid, in a specified foreign currency.
B. Brazilian Regulation of Foreign Lending in General
Brazil imposed restrictions on the receipt and exchange of
foreign currency. By law, all loans from foreign lenders had to be
registered and approved by the Central Bank. Through a
registration process, the Central Bank set the range of acceptable
interest rates, and periodically established the minimum repayment
terms, of loans. Once the Central Bank approved a loan, the lender
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