Amadeusz Juskowiak

German banks seek greater brazil link with imf

West German banks would like Brazil to work more closely with the International Monetary Fund IMF with a view to seeking a solution to the countrys debt problems senior West German banking sources said

The sources speaking ahead of a meeting later today between Brazilian Finance Minister Dilson Funaro and his West german counterpart Gerhard Stoltenberg also believed Brazil should come up with a convincing economic recovery program

Their comments echoed those of British Chancellor of the Exchequer Nigel Lawson who met Funaro yesterday

Funaro is currently on a European trip seeking to involve governments in negotiations with commercial banks on rescheduling part of Brazils foreign debt which totals some 109 billion dlrs But Lawson told Funaro Brazil had to solve its problems with the banks rather than governments

Diplomatic sources in Bonn said Funaro would leave early tomorrow morning for Zurich after meeting Stoltenberg this evening

Funaro has rejected suggestions for negotiations with the IMF and said there is no question of Brazil agreeing to an austerity program with the Fund

However the West German banking sources said institutions here felt it was particularly important that Brazil presented a credible recovery program and that there be a rapprochement with the IMF

Consultations are the least that can be expected said one banker

Funaros trip follows the decision by Brazil 10 days ago to suspend interest payments on 68 billion dlrs of commercial debt It has also frozen bank and credit lines deposited by foreign banks and institutions worth about 15 billion dlrs

One senior banker closely involved in Brazilian debt negotiation offered qualified support for a call from Funaro for a change in the structure of the advisory committee of banks which has coordinated Brazilian debt since 1982

Funaro said yesterday that US Banks holding 35 pct of Brazilian debt were overrepresented on the 14bank advisory committee with 50 pct of the committee seats He said Brazil might adopt a different approach to its creditor banks involving separate discussions with the regions

Such a move would be in Brazils interest since European banks have been more supportive than US Banks of alternative debt solutions such as interest capitalisation

The senior banker was strongly opposed to a purely regional approach saying There must be one committee and one solution But he added There must be an understanding that special requests from special regions be taken into account

German banks had objected to the fact that the idea of interest capitalisation had been rejected in the committee It was imperative that alternative options be considered The menu must become richer the banker said

Banking sources said commercial banks would not be involved in todays talks with Funaro A spokesman for the Bundesbank in Frankfurt said the central bank would also not be represented

West German banks have taken a more relaxed attitude to the Brazilian suspension of interest payments than institutions in the United States because of their lower exposure

According to Bundesbank data from September last year West German bank exposure to Latin America of slightly under 16 billion marks represented less than five pct of all foreign credit