BRAZIL, BANKS FAIL TO MAKE BREAKTHROUGH IN DEBT TALKS
Brazil and its bank creditors failed to
achieve any breakthrough in debt talks here last night after
Brazil refused to say when it would resume interest payments.
    Central Bank governor Francisco Gros said after a meeting
with a 14-bank advisory committee that Brazil cannot make any
interest payments at this time, though it would do so "as soon
as we can."
    The talks came as the annual meeting of the 44-nation
Inter-American Development Bank (IADB), in which both Gros and
the bankers had been taking part, moved toward a close here.
    Bankers leaving the meeting with Gros declined to discuss
details of the talks, though some expressed satisfaction that
Brazil had agreed to continue working with the committee.
    At the same time, Gros told reporters not to expect any
dramatic developments before March 31, the date when some U.S.
banks have said they will take a decision whether to put Brazil
loans on a non-performing basis.
    Brazil suspended interest payments on its 68 billion dlr
foreign debt to commercial banks on February 20 and shortly
after announced it was freezing some 16 billion dlrs in
short-term credit lines.
    Banks are not obliged to declare these loans non-performing
before 90 days have elapsed, but the move to announce a
possible decision in this respect was viewed as a means of
exerting pressure on Brazil.
    The bank committee, headed by Citibank, had been pressing
Brazil to make at least a token payment of interest but Gros
said this was not possible right now.
    "We are not in a position to make a payment at this stage,"
Gros said.
    At the same time, the two sides reached a stopgap
arrangement on the short-term trade and money-market credit
lines, whereby the committee agreed to transmit a Brazilian
request to extend the lines for 60 days until May 31.
    Banks have been indicating they will not renew credit lines
in response to the Brazilian move.
 Reuter
